Letters | Trump’s chaos holds a silver lining for China and others

In less than two months since taking office, US President Donald Trump has turned the world chaotic. He has pledged to “make America great again”, and this seems to be at the expense of global stability. However, his relentless measures have inadvertently been blessings in disguise for some stakeholders.

The Department of Government Efficiency (Doge) led by Tesla CEO Elon Musk is a temporary organisation established to streamline the operations of federal departments by cutting costs and downsizing manpower. At last count about 100,000 people have been let go. This will fuel the US unemployment rate, which should prompt the Federal Reserve to cut interest rates.

Trump is a keen proponent of low interest rates because his companies are heavy borrowers, therefore Doge is his axe to grind for his own good. If interest rates are lowered, small and medium-sized enterprises as well as individuals will be in a better position to settle their loans.

The US’ relationship with its neighbours, Canada and Mexico, has soured because of the punitive tariffs Trump has imposed. China could forge closer ties with them on trade, environmental issues and foreign affairs.

If Trump’s “reciprocal tariffs” are implemented worldwide, it will put a damper on the global economy and consequently suppress the price of crude oil, which is likely to hover around US$60 per barrel this year. Crude oil prices at this level are conducive to mild inflation and low interest rates, even though increased tariffs will cause US consumer prices to soar.

China has been concerned about the relocation of big foreign manufacturers as they seek to avoid tariffs or other trade barriers from importing countries. Trump’s reciprocal tariffs might discourage these companies from moving out of China because they would have to bear the brunt of tariffs wherever they go. Attempts to manufacture in the US are doomed to fail owing to exorbitant production costs and overbearing trade unions.