‘Hulk’ Trump has smashed through the global economy and wiped out trillions overnight

In his bid to revive the American Dream of his upbringing, the US president has discarded both global economies and common sense, writes Sean O’Grady

Like something out of a The Incredible Hulk movie (except orange, not green), Donald Trump has burst out of his metaphorical shirt, let out an almighty roar, unleashed his strength and set about smashing up the world trade system.

This week has witnessed a range of economic destruction on a scale unmatched by anything since the Second World War: almost comically random tariff schedules, baffling reasoning – are they a mere tactic or a permanent fixture? – and a sense of satisfaction in punishing “friend and foe” alike. No one – not even the countries that have a trade deficit with America – were spared.

Cowering in a corner we find the world’s economists, consumers, great companies and investors, all terrified by what Trump might do next. The World Trade Organisation ran from the scene long since. Something like $3 trillion of value has been wiped off the world stock markets, and even that may only be the start.

The sheer speed and scale of what Trump is doing – if he’s serious and keeps smashing through the guardrails – threatens to tip the world into recession, and America with it.

The markets, distressed as they are, have not yet fallen into a full-on crash. But only because they assume that such erratic policy-making will in due course be corrected and the tariffing watered down. If not, then the valuations attached to the world’s largest corporations will have to fall, for the simple reason that they can no longer make things in the most efficient manner, and thus generate the returns they need to justify anyone buying their shares. There will be a tsunami of profit warnings in the months ahead.

Trump has not only upended the post-war rules-based international trading system, but the very concept of globalisation and the operations of every manufacturing, transportation, logistics and resources company on earth. Not far behind them will be the banks and investment houses that finance and are invested in them. And when the rest of us next see a valuation of our pension pots we will see the immediate and colossal impact. This is where it hits home.

It’s at times like these that the markets panic. It could be, as reported, that investors can’t quite believe what is happening, and that any American president could abandon free market-based economics for eighteenth-century mercantilism, and set about making America look like the 1960s again.

But what if he means it? What if he ramps the tariffs up again if countries retaliate? What if it escalates?

Trump has a picture of The American Dream that he grew up in, and it’s of sweaty guys knocking out Buicks in Detroit. It’s all about factories, workshops, textile mills, the New York rag trade, coal mines and nodding donkey oil wells, like a montage of Norman Rockwell paintings. Those are the low-paid, exhausting, dangerous jobs that Trump wants to take back from China, Vietnam and Cambodia.

At the end of the TV episodes of The Incredible Hulk, his anger would subside, his civilised side would return and he’d stroll back to something like normalcy – albeit always living with the jeopardy of that anger erupting again.