Will the world be ok without the USA?

Trump has just signed an executive order to impose 25% tariffs on car imports, and it’s not looking great for other countries. While the Trump administration’s commitment to their electoral motto, Make America Great Again, has gained the steady support of many Americans, other countries are growing increasingly wary of Washington’s cautious steps in the international community. But what does this mean for the global economy? What will the future look like? Is the Trump Administration taking the US into a path of Isolationism? Let's take a look.

• How much influence has the US made and gotten from the global economy? 

According to the US News Report, the United States is the 2nd most economically influential country in the world. The consumer market in the US is also substantial with 14 trillion USD in personal consumption expenditures, measures of consumer spending including all goods and services by households. 

With such a large market, American domestic producers cannot uphold the constant demands of the public. In fact, the Bureau of Economic Analysis from the US Department of Commerce has found that in 2017, imports of goods increased from $9.5 billion, or 3.9 percent, to $253.8 billion, compared to a 4.0 percent increase in nominal imports. And as of 2022, imports of goods and services amounted to around 15.59 percent of U.S. gross domestic product (GDP). 

And the impact of imports is even more substantial in individual markets. Let's look at the automobile industry, one of the top 10 industries in the US. Among the top five automobile companies in the United States, only two are domestic. Although this provides the US with substantial import taxes, we can also come to understand why the Trump administration wants to focus on growing the competitiveness of the domestic companies.

• What is a Tariff?

A tariff is a tax imposed by one country on the goods and services imported from another country to influence it, raise revenue, or protect competitive advantages (Investopedia). They enforce people to have to adjust their spendings to domestic goods due to the increased prices from paying more taxes. This is due to retailers and manufacturers having to put more into production within the state. The excessive use of this regulation act would lead to the nation’s economy to be isolated from the rest of the world and lose its ability to collaborate with other countries.

• What is bad about Economic Isolationism?

Economic isolationism is the policy of trying to isolate one's country from the affairs of other nations by 1) declining to enter into alliances, foreign economic commitments, international agreements, and generally attempting to make one's economy entirely self-reliant; 2) seeking to devote the entire efforts of one's country to its own advancement, both diplomatically and economically, while remaining in a state of peace by avoiding foreign entanglements and responsibilities. Based on this definition, it is not difficult to see why the Trump administration is willing to risk straining the relationship of its partners in the international stage—to strengthen the domestic market’s self-sufficiency. With the progression of this administration, the global community will need to wait and see the influence of economic isolationism on the US.