Donald Trump’s trade war can’t solve America’s problems, but it is creating plenty for the global economy

Deepening political divisions and growing fears pose the biggest challenges for the global economy right now. America’s trade war with China and Britain’s Brexit spat with Europe are doing no favours for global growth just when the world economy needs as much goodwill and positive drive as possible.

At the heart of the trade war is the fear of losing out. It is being driven by Washington’s unease about China’s growing domination of global manufacturing, while growing US protectionism is feeding Beijing’s fears about blocked growth opportunities.

US President Donald Trump wants to make America great again but sees globalisation standing in the way. It’s a sobering reminder that the US needs more radical economic restructuring to stay ahead in a fast-changing world. Without a major overhaul, all Trump can do is soften the blow with more tax cuts and increased government spending, placing further strains on the US budget and trade deficits.

The US is stuck in a serious policy rut. For all of Washington’s trade brinkmanship with Beijing over the past few years, it has yielded no positive results. Hopes are high that some progress may emerge from US-China trade talks over the coming weeks, but at what cost so far?