Tariff Tensions: Jim O'Neill Says US 'Throwing Brick At World Economy's Operating System'

Jim O'Neill, former Chair of Chatham House and ex-Chief Economist at Goldman Sachs, expressed deep concerns over the escalating tariff impact between the world's largest economies. Speaking on Monday, O'Neill highlighted the severe implications of the ongoing trade tensions initiated by US President Donald Trump's sweeping tariffs.

"It's pretty scary," O'Neill remarked. He pointed out that the three economies contributing more than 50% of global GDP since the start of the millennium are now "throwing very large bricks at each other."

O'Neill criticised the stance of the US leadership, suggesting it is "literally trying to throw an ever bigger brick on the core operating system of how the world economy, business, and financial system has operated." He added, "Not surprisingly, financial markets around the world are reacting accordingly."

President Trump's recent tariff measures have sent shockwaves through global markets. On Monday, the Nifty 50 fell over 5% to 21,743.65 and Sensex dropped 5.23% to trade at 71,425.

O'Neill also commented on China's retaliatory tariffs, noting the unpredictability of the situation. "So obviously, it is all very, very unpredictable as to what each day and each week follows," he said.

He criticised the US approach, stating, "Effectively influenced by his extreme anti-trade supporters, Trump has come up with a system that anybody who has a trade surplus faces a bigger tariff, irrelevant of their existing tariff."

O'Neill urged the rest of the world to unite in response to the US tariffs. "The most sensible thing to do for the rest of the world is… leaders of the rest of the world should get together and pursue lower tariffs between themselves and boost ideas about cross-border trading services"

Addressing the potential redirection of China's exports to Asian markets, O'Neill warned of unintended global trade consequences." If they(other Asian countries) now see the first evidence of large exporters like China, Germany, to start and dump their excess stuff into their country which would normally go to the US... then other governments will try to support their economy (with domestic tariff on export)."

O'Neill also predicted a sharp decline in US domestic demand due to the tariffs. "In a cyclical sense, there will be a sharp decline in US domestic demand because of the relative price shock to US consumers that will hurt US consumption, and the US will go into recession and imports will fall sharply," he said.