Can Trump achieve his goals with the trade war?

The US president refers to the imposition of tariffs on goods from almost all countries as "protecting America's economic interests." International finance expert Xondamir Nusratxo'jayev discussed the impact of this policy on the US and the global economy with Professor Behzod Hoshimov from New York University.

According to Behzod Hoshimov, international trade was liberalizing and the integration of countries was expanding after 1945. If Trump's tariff policy is not revoked, it will cause significant economic damage and losses for both producers and consumers in the US, as well as for the world.

"From a simple pencil to products like the iPhone, goods cross hundreds of borders. Specialization in production chains was increasing. For example, a large portion of microchips was produced in the Netherlands, and rubber in Malaysia. This means that countries are deeply interconnected because different goods are produced in various places. Interestingly, although the US is the largest economy and consumer market in the world, its share in trade was not that large. Many things were produced within the country. The United States has oil, metals, water, and timber. A very large economy is not deeply interconnected with the outside. However, the most efficient sectors in the country, including aircraft manufacturing, are very much linked with producers in Europe and Asia.

On the other hand, the US benefited from international trade through lower prices. Due to the low prices, a significant portion of consumer goods was imported from the developing world. At one time, shirts or socks were produced in America, but later people began to shift to sectors that create high economic value, such as IT and architecture. This is a natural process.

Trump's tariffs will increase prices. For example, coffee is fully imported into the US. The situation with eggs is similar, as feed for poultry is brought in from abroad. This has a very negative impact on American consumers. If tariffs remain in place, countries with significant trade turnover with the US will struggle. If the tariff war continues for the next four years, it will cause significant economic damage and losses for both producers and consumers in the US, as well as for the world," says Behzod Hoshimov.

Xondamir Nusratxo'jayev pointed out that Trump views the trade deficit as exploitation of the US and raised the question of whether having more imports than exports is truly a negative aspect for America.

According to Professor Hoshimov, this has become an ideology for the current US president.

"For Trump, this is an ideology, a concept. Many say it's a negotiation tactic. No, Trump has believed this for decades. His previous economic advisor talked to him about this for hours. Not everyone around him supports this policy. According to the New York Times, even Elon Musk, one of his closest advisors, has asked several times not to impose tariffs. So, this is not a political tactic of Trump, but rather his ideology.

He thinks that the US is buying something worth 100 som from Vietnam and selling something worth 1000 som. Therefore, we have a loss of 900 som in trade with Vietnam. The imposition of tariffs is viewed from the perspective of equalizing this situation.

For example, let's take a household scenario. You go to a café and order coffee, but they do not consult you on Islamic finance (Xondamir Nusratxo'jayev is considered an expert in Islamic finance – ed.). There is always a negative trade balance. Or the trade relations with the baker next to your house are similar. It’s like saying, if you give me economic advice, I might buy bread from you. As humanity becomes wealthier, it tries to do less by itself. Previously, many tried to fix their own cars, but now it's not the case. That is, as Uzbeks become more economically developed, they will start to have more things done by others. Despite the overall negative trade balance of the US, the investment balance is positive. That is, investors are investing in securities and bonds here. Some of this money goes to finance imports, and this is normal," says Hoshimov.

Xondamir Nusratxo'jayev evaluated Trump's attempts to bring production back to America and posed the question of whether it is possible to achieve this by suddenly imposing high tariffs.

"I read the opinions of manufacturers in the US in February; they are considering halting investments in building large factories for 18 months until the tariff issue is resolved. Building large enterprises may only pay off after decades. If Trump leaves or suddenly changes his mind, it may not pay off. In the current uncertain environment, such investments cannot be made. Secondly, everyone believes that this situation will not last long," says Hoshimov.