Global | Tariffs, a trade instrument or a covert financial strategy?

Summary

Both Mario Draghi in Europe and Donald Trump in the United States support the increase in tariffs on Chinese imports, but with objectives that seem to reflect different historical conceptions of the wealth of nations.

Key points

• Key points:
• For any of these strategies to succeed, it will be necessary to manage not only the consequences of tariffs in a highly interconnected global production network—a widely debated topic—but also their impact on the global financial architecture.
• Trump takes a mercantilist perspective, measuring wealth by the assets a country controls. His emphasis on reversing the trade deficit with China stems from the fear of a transfer of wealth that today is strengthening Beijing's financial power.
• Draghi conceives of wealth as the productive capacity of an economy. He proposes temporary tariffs focused on emerging strategic sectors, with the aim of promoting industries that can innovate and lead the sustainable transition.
• Neither of them is guaranteed success. Both are aware of the repercussions on an interconnected global production network, but they would do well to take a closer look at the other side of the mirror: the impact of tariffs on a global financial architecture where Chinese investment is increasingly relevant.

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