President Trump’s imposition of tariffs on country’s that export more to the USA than they import from the USA represents a sea-change in US global economic strategy.

After the fall of the Soviet Union the USA became the dominant global power and the world became ‘unipolar’. The strategy adopted by the USA promoted 'free trade' in accordance with US regulations. This was done using the dollar as the worlds ‘reserve currency’ backed up by the US military – the most powerful in the world.

This became known as ‘neo-liberalism’. The term liberal, in this context, doesn’t mean being nice to pussy cats. It means being as free from regulation and government control as possible. Any country that failed to allow this and which sought to establish public services run by the state and not for profit were condemned as being ‘unfree’. The ultimate guarantee of ‘freedom’ was seen as ‘privatisation’ through the ‘free market’.

In the UK water, gas, electricity and a whole host of other services were owned by the electorate. ‘Neo-liberalism’ meant that these assets were sold off under the pretext that they could be better run by the market. Overseas investors could and did buy them. Profit became the main driver in their supply. Inevitably this meant rising prices.

Trump’s tariffs sharply reverse the policy of global free market neo-liberalism. Instead of markets being allowed to control everything, tariffs are being imposed where trade practices are considered ‘unfair’ or detrimental to the USA. The countries affected will find it harder to export goods to America because the price will go up and the goods will be less attractive to consumers. President Trump believes this reduced competition from foreign goods will mean that US companies will become profitable and grow.

However, it is likely that many countries will move trade away from the USA and reach agreements with others that don’t impose tariffs, and trade between themselves in their own currencies. The dollar will no longer be so attractive. The USA will thereby lose a powerful economic advantage. Trumps tariffs will accelerate the debt crisis that the USA has created for itself by the dollar being the worlds reserve currency.

Who are the winners in this? The short answer is that it is those countries in the rising BRICS alliance - Brazil, Russia, India, China and South Africa which have already established new trading structures to by-pass the dollar. They will be able to avoid the worst impact and will grow in strength. BRICS will become attractive to more countries.

What is the alternative? The USA should get together with the other major powers and launch a new world reserve currency. This was what the British economist John Maynard Keynes initially proposed as an alternative to the American dollar.

It is unlikely to happen. It would mean the end of US global dominance. We are much more likely to see war. Trade wars have a habit of turning into hot wars.