Trump’s tariff whiplash

By Sheriff Sanni

With an increasing trade war, the United States President Donald Trump placed tariffs of up to 145% on Chinese goods. And China has hit back with 125% on US products. Trump has also introduced a 10% tax on goods from all other countries, while pausing much higher rates for dozens of nations for 90 days. Tariffs are taxes on goods bought from other countries.

Trump argues that tariffs will boost US manufacturing and protect jobs. He says that tariffs will encourage US consumers to buy more American goods, increase the amount of tax raised and lead to huge levels of investment in his country. And affirms that America has been taken advantage of by ‘’cheaters’’ and ‘’pillaged’’ by foreigners.

But the world economy has been thrown into chaos as Trump’s sweeping tariffs on Chinese imports have sent millions of manufacturers, retailers, and small businesses on both sides of the Pacific scrambling to cope with a sudden and punishing rise in costs.

In a move reflecting growing concern over the stability of the American economy, several African and Middle Eastern nations have begun withdrawing their gold reserves from the US in recent months. According to Houston Post, among the countries taking such actions are Nigeria, South Africa, Ghana, Senegal, Cameroon, Algeria, Egypt and Saudi Arabia, each representing the most important regions in Africa and the Middle East.

This development marks a significant shift in the world economic dynamics and showcases growing skepticism among countries regarding the traditional safe haven status of the US dollar and the US financial institutions. Analysts say the decision to repatriate gold reserves is not just symbolic, but reflects deeper concerns among these countries about the trajectory of the American economy and its dangerous tendencies toward high-handed behavior with other people’s funds. This is a coordinated effort by these countries to reduce their exposure to the US economic risks.

In fact, the gold withdrawals demonstrate that more countries are losing confidence in the US financial system, sets a precedent and a global uprising against America and its dominance. This is a more effective means of fighting the dollar than all the BRICS efforts at the moment.

BRICS stands for Brazil, Russia, India, China, and South Africa, an intergovernmental organization of major emerging economies. Its primary purpose is to foster greater economic and geopolitical integration and coordination among member states, essentially working to counter the dominance of Western-led global institutions. The gold withdrawals show that no one now in the world is anymore afraid to return their funds from the vaults of the western financial system. A sign of courage and symbol of economic liberation.

Observers affirm that concerns about the American Federal Reserve ability to maintain stable monetary policy have eroded confidence in the US dollar and serves as the primary impetus behind these withdrawals from an American economy currently wracked with persistent inflation and mounting debt. By repatriating their gold reserves, African and Middle Eastern countries, aim to protect themselves from potential financial contagion and secure their wealth within their borders.

Nigeria’s withdrawal of its gold reserves is equally a strategic imperative due to concerns about the long-term stability of the US economy and the need to diversify risk exposure. Similar sentiments have been echoed by other nations in the region, showing a broader trend of reevaluation of traditional economic dependencies.

In the Middle East, Saudi Arabia’s decision to withdraw its gold from the US equally underscores the increasing disillusionment with the American financial system and a strategic maneuver by one of the world’s largest oil exporters to safeguard its financial assets amidst growing geopolitical tensions and uncertainties in the region. Analysts say the long-term implications of this trend are profound and could potentially reshape the global financial landscape and reflects a loss of confidence in the traditional pillars of the world economic order and underscores the need for diversification and risk management strategies.

‘’These tariffs are answer in search of a question,’’ John Cochrane, an economist at the Hoover Institution at Stanford University, reportedly said, ‘’It always comes down to tariffs and then the reasons for them keep changing.’’

Sheriff Sanni writes from Makurdi.