Reza Majidzadeh – Economic Analyst

The economic goals that Donald Trump pursues are helping both the American industry and increasing employment in the United States.

According to the US trade law, the American president has the authority to employ a trade warfare apparatus such as increasing tariffs. Whenever the president feels that US industries are in jeopardy as far as international trade is concerned, he can do so without requiring ratification by the US Congress.

Mr Trump’s political objective of the economic war, however, is to increase US power as a global hegemony, because prospects for the 2025-2050 horizons show, most likely, China will overtake the United States and India will join the triangle of America and China in the competition arena.

In terms of domestic and foreign policies, India is more aligned with the US than China. One should consider, however, that a trade war is a two-way conflict, and the European Union, NAFTA (North American Free Trade Agreement) member states and also China are expected to respond to US actions.

At present, the volume of foreign trade between the EU and the US is $ 704 billion, two-sevenths of which belongs to trade exchanges between the US and Britain. Nevertheless, Britain is of special importance for the US as it is considered the gateway to EU markets.

Consequently, the EU countries can indirectly cause the American companies to lose their access to EU markets for a while through pushing the implementation of Brexit, despite the fact that considering British international law, London is the one that should push the Brexit button on; because if Washington wishes to have a free trade agreement with London, the US has to wait for Brexit to be fully implemented.

In addition, the European Union can reciprocate and levy tariffs for the remaining five-sevenths of EU foreign trade volume with the United States. However, levying tariffs will trigger a sequence of such activities in relations between the US and European and other countries, as Mr Trump has threatened to do the same for imports of European cars at next stage. Therefore, EU countries are expected to take the next step in reciprocating similar acts.

The major consequence of this trade war is weakening the World Trade Organization (WTO) and possibly dwindling global free trade, a development that creates the ground for re-emergence of trade blocs. Such trade partnerships, in turn, provide opportunities for many countries to take steps toward strengthening their regional organizations based on their interdependence. The Russian and Chinese emphasis on reinforcement of the Shanghai Organization and the Silk Road Project, for instance, is a sign of such reorganization in the international trade arena.

In such a situation, there is a chance for Iran to both confront Trump’s economic warfare and join the regional trade alliances like the Shanghai Organization.

But the more important point is that Mr Trump has signalled to world countries that the US commitment to world bodies, contrary to what has been the precedent so far, is largely reversible and untrustworthy.  Thus the EU, China as well as Russia are seeking to reinforce the majority of regional and international alliances that are independent of the United States.

The recent joint press conference of Mr Trump and Mr Putin in Helsinki asserted the point that there is still a solid wall between the US and Russia against the expansion of ties, and Mr Putin’s implicit endorsement of JCPOA (Joint Comprehensive Plan of Action) deal confirms that notion. The trade volume between Moscow and Washington is about $ 20 billion, a figure that in comparison with the European countries, speaks of its far less reliance on the United States.

Therefore, cooperation with Russia and China in different areas, given China’s high dependence on oil, provides Iran with a better chance of confronting the US economic warfare.

Also, as far as gas sales are concerned, the situation is similar to a multipolar monopoly in the world; though the United States intends to compete with Russia in selling liquid natural gas (LNG) to Europe, Iran can benefit from both petroleum and gas leverages.