Diggers & Dealers keynote speaker former President of the European Commission and Prime Minister of Portugal Jose Manuel Barroso has taken aim at US President Donald Trump’s recent hefty trade tariffs, saying threats to free trade were detrimental to global growth.
Under Trump’s leadership, the US has waged a “trade war” against China by taxing A$46 billion-worth of Chinese imports, resulting in China responding in kind.
However, Trump did not stop there. He’s also launched trade tariffs on numerous goods imported from the US and Canada. Commenting on the tariffs, Mr Barroso said he couldn’t understand the rationale of the US imposing tariffs on its closest trade partner.
With global economies in the best position they’ve been in decades, Mr Barroso said this current upward momentum could be harmed by nationalist and protectionist policies in advanced countries like the US with its trade tariffs and the UK with its exit from the EU, otherwise known as Brexit.
Mr Barroso told Small Caps that the policies, particularly the threats to free trade, undermine business confidence and restrict investment.
He said these effects are already apparent, with investors holding back.
“Investors are extremely worried.”
Protectionism based on fear
Mr Barroso added these nationalistic policies are a result of movements coming from the far right and far left, and are underpinned by fears of globalisation.
Globalisation brings with it an influx of free-flowing information, culture, science, communication, technology and people across continents.
As the US becomes even more insular, Mr Barroso points out the nation previously headed-up the new global order after the second world war.
This was part of globalisation, but an American-centred infiltration.
Since the second world war, America’s language and way of life has spread across the globe.
The US has given the world the likes of Hollywood, Silicon Valley, Apple, Google, Microsoft and Amazon – just to name a few.
So, Mr Barroso poses the question: how can the country that was at the forefront of globalisation in recent history, suddenly do a complete about face?
Mr Barroso said it arises from fear. President Trump is afraid of the changing power balance, where China is gaining more muscle on the world stage.
“[It is] a global rebalance of power.”
However, Mr Barroso notes that “power is an illusion” and transient.
A bank that is the most powerful in the world one day, can be dissolved and powerless the next.
Not all doom and gloom
Despite the apparent current frictions around the globe, Mr Barroso points out more peace prevails now compared to the previous century.
He also said he believed the long-term trend would continue towards globalisation, but we needed to teach the next generation to “embrace change”.
“You can be patriotic, while having respect for all parts of the world and mankind,” Mr Barroso said.