One week short of his full year in office President Trump’s economic policies (prohibitive tariffs as well as sanctions) and international relations pertaining to not only rivals/competitors but also traditional allies (Europe) barring Israel, has fuelled a level of global uncertainty that has no historical precedence.

A recap of US actions over the past year is critical to understand the scale and depth of the uncertainty, the key driver of a global dampening of economic activity, including developing economies like Pakistan. Four major observations are in order.

First, the levy of prohibitive tariffs on all trading partners (19 percent tariffs on Pakistan – a decline from 29 percent that were imposed earlier by the Trump administration, though higher than the average 10.7 percent tariffs imposed by the US in previous years).

China not only began to import farm products from countries other than the US but also successfully leveraged its monopoly over rare earths supply chain (accounting for between 90 and 92 percent of global refined rare earths supply) – elements critical for the manufacture of smartphones, electric vehicles, wind turbines, Artificial Intelligence, data centres, advanced electronics as well as fighter jets, submarines, radars, sonars, and missile guidance systems.

In contrast, the European Union (EU) capitulated by agreeing to eliminate tariffs on all US industrial goods, provide preferential access to a wide range of US seafood and agricultural products while the US would apply an all-inclusive tariff of 15 percent on most EU imports except for unavailable natural resources, aircraft, and parts and generic pharmaceuticals.

EU President Ursula von der Leyen bafflingly also agreed to purchase 750 billion-dollar worth of oil, LNG and nuclear energy products (at much higher rates than previously available from Russia), 40 billion dollars in AI chips as well as invest 600 billion dollars in the US by 2028.

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