World economy could get carved up into these 3 trading blocs

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1751766099 World economy could get carved up into these 3 trading.jpg

Globalization began to retreat before president Donald Trump shocked the world with his aggressive trade war earlier this year.

But its definitions accelerated the trend, which led the allies to question the role of the United States in the world with the President of the European Commission, Ursula von der Lin, even in April, “The West as we knew it no longer exists.”

While Trump has retreated from the highest rates, the definitions do not seem to be somewhat going soon. On Thursday, he suggested that the United States impose a tariff of up to 70 % in the coming days.

Noting last month, economists in Wales Fargo drew a virtual scenario where the world is divided into three commercial blocs led by the United States, China and the European Union.

The American bloc includes most of the western hemisphere in addition to the traditional allies in Asia and the Middle East. The Chinese bloc includes Russia, many East Asia and Central Asia, and the most important economies in Africa, as well as a few countries in Latin America and the Middle East. The European Union bloc is the smallest group, including the European Union, the United Kingdom, Iceland, Norway, Switzerland, Turkey and Ukraine.

“It was to renew the disposal of the roots in the geopolitical and economic competition between the United States and China,” said Wales Vargo. “The recent events arouse the possibility of further contraction in the global economic system. In particular, the possibility of the European Union in its geopolitical and economic direction is no longer incomprehensible.”

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Economic effects of mixing

Wells Vargo assumes the legal challenges facing Trump’s tariff, with the actual rate stable by about 14 %. While this is much lower than some of the most severe rates in which Trump revealed on “Tahrir’s Day”, it still represents a sharp increase in an effective rate of 2.3 % at the end of 2024.

For its analysis, the bank looked into 100 countries representing 97 % of global GDP and 93 % of global exports, then divided into the three blocs.

The American bloc had about half of Global GDP in 2023, while both blocs in the European Union and China represent about a quarter of global GDP.

In the three -pole world where each tariff mass imposes 15 % on other blocks, Wells Fargo used the global economic model for Oxford to estimate the Global Global GDP will grow 9.1 % between 2025 and 2029, instead of an average of 11 % by a basic scenario where trade is mainly free.

This translates into the missing world on about $ 3.8 trillion in GDP during that period, or approximately $ 1,800 for the four -consisting family.

“The effects preserved on the growth of fees in the first two years after their imposition, but the level of global gross domestic product is never due to the foundation line, at least not during the expected period that we consider,” Wales Vargo said.