The global economy could be engraved in these three trading blocks
Globalization began to retreat before President Donald Trump shocked the world with his aggressive trade war earlier this year.
However, his tariffs accelerated this trend, urging allies to question the role of the United States in the world, even declaring that European Commission President Ursula von der Leyen in April, “the West where we knew we didn’t exist anymore.”
Trump has been pulled back from his highest fees, but some form of tariffs do not appear to be leaving anytime soon. On Thursday, he proposed the US will. Unilaterally imposes customs duties It’s now 70% in the next few days.
In a memo last month, the Wells Fargo economist sketched a hypothetical scenario in which the world is split into three trading blocks led by the US, China and the EU.
The US bloc includes most of the Western Hemisphere as well as traditional allies from Asia and the Middle East. The Chinese bloc includes Russia, many of East Asia and Central Asia, Africa’s top economies, and several countries in Latin America and the Middle East. The EU bloc is the smallest group, covering the European Union, the UK, Iceland, Norway, Switzerland, Turkey and Ukraine.
“Deglobalization had its roots in geopolitical and economic competition between the US and China,” Wells Fargo said. “Recent events have increased the likelihood of further cutting off the global economic order. Specifically, the possibility that the European Union could move in its own geopolitical and economic direction is no longer measurable.”
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Economic impact of deglobalization
Wells Fargo assumes that Trump’s legal challenges against tariffs will ultimately fail, with actual efficiency settling at around 14%. It’s far below some of the steepest speeds revealed in “liberation day”, but it still shows a sharp increase from Effectiveness rate of 2.3% End of 2024.
For that analysis, the banks focused on 100 countries, which account for 97% of the world’s GDP and 93% of the world’s exports, splitting them into three blocks.
The US bloc had about half of the global GDP in 2023, while the EU and China blocs each represent about a quarter of global GDP.
In a tripartite world where each block imposes a full 15% tariff on the other blocks, Wells Fargo used it. Oxford Global Economic Model To estimate global real GDP, under a baseline scenario where trade is essentially free, a 9.1% increase between 2025 and 2029, rather than the 11% rate.
This leads to a world that missed about $3.8 trillion in GDP during that period, or a world that missed about $1,800 for a typical four household.
“The growth effect of taxation is felt in the first two years after stating, but at least during the forecast period, levels of global GDP will never return to baseline,” Wells Fargo said.
We’re block
- US
- Japan
- India
- Brazil
- Canada
- South Korea
- Mexico
- Australia
- Saudi Arabia
- Argentina
- Bahrain
- Bangladesh
- Chile
- Columbia
- Costa Rica
- dominican republic
- Ecuador
- Egypt
- El Salvador
- emergency
- Honduras
- Israel
- Jamaica
- Jordan
- Kuwait
- Morocco
- new zealand
- Panama
- Paraguay
- Peru
- Philippines
- Qatar
- Singapore
- United Arab Emirates
- Uruguay
I’ll block it
- european union*
- England*
- Iceland
- Norway
- Switzerland
- turkey
- Ukraine
China Block
- China
- Russia
- Indonesia
- Thailand
- Vietnam
- Malaysia
- Afghanistan
- Algeria
- Armenia
- Azerbaijan
- Belarus
- Bolivia
- Cambodia
- Iran
- Kazakhstan
- Kenya
- Kyrgyzstan
- Nicaragua
- Nigeria
- Oman
- Pakistan
- South Africa
- Sri Lanka
- Syria
- Tajikistan
- Tanzania
- Tunisia
- Turkmenistan
- Uganda
- Uzbekistal
- Venezuela
- Zimbabwe