United States President Donald Trump announced on Thursday the country will suspend all travel from Europe, excluding the United Kingdom, for 30 days starting with Friday in order to contain the coronavirus outbreak. However, the import of goods and cargo won’t be stopped. Trump insisted the US has taken the “most aggressive effort to contain the foreign virus in modern history,” adding that the government responded with “great speed and professionalism.” He claimed the European Union failed to take the necessary precautions to prevent the virus from spreading, causing a large number of new clusters in the US to appear due to infected European travelers. Exemptions from the aforementioned measure, he said, will apply to American citizens returning home from Europe, while travel restrictions will also affect foreign nationals who traveled to the Schengen area in the last two weeks. The move failed to stem heavy losses on financial markets and prompted one top economist to warn that a global recession was now “highly probable”. In a sombre primetime address from the Oval Office on Wednesday evening, the US president boasted that the travel ban and series of other measures designed to cushion the economic blow of the outbreak amounted to “the most aggressive and comprehensive effort to confront a foreign virus in history”.
But Asian stock markets and Wall Street futures trading plunged deep into the red even as Trump laid out his plans, with investors betting that the $250bn package would not be enough to reverse the creeping shutdown of the world’s largest economy.
Confusion following Trump’s address later forced officials to clarify that cargo, as well as non-Schengen countries in Europe, would also be exempt from the ban. Observers said the speech, in which Trump gave the sense of resisting a foreign invasion, struck a strange tone. David Litt, who wrote speeches for Barack Obama, said: “As a former presidential speechwriter, my careful rhetorical analysis is that he’s gonna get us all killed. Trump still attempted to deflect blame, calling it a “foreign” virus and saying that there had been “dramatically fewer cases” in the US than in Europe. Nick Bit: The US still tests far fewer people then any other G20 member. It is a collosal failure by the Trump administration and the CDC, The US still has no idea how big the Pandemic is.
The US economic measures revealed by Trump include financial relief for workers who are ill, quarantined or caring for others due to the illness, Trump said, adding that the US treasury would defer tax payments without interest or penalties for certain businesses and individuals. The financial system would be bolstered by an extra $200bn in liquidity, he said, and small businesses would be given access to more capital and liquidity.
But Mohamed El-Erian, the highly respected chief economist of insurer Allianz, said such measures would not do enough to prevent the shutdown of economies across the world, which was now gripped by the “economics of fear”.
“The advanced economies are now likely to feel the full force of economic sudden stops that destroy both supply and demand at the same time,” he said. “The collapse in economic activity risks being amplified by the economics of fear, uncertainty and adverse economic-financial feedback loops.
“I believe there is a high probability of global recession.” His gloomy analysis was reflected in financial markets in Asia Pacific, which plummeted into full selling mode during and after Trump’s address. The ASX200 in Sydney was down 7.2%, in Tokyo the Nikkei was off 5.4% and Hong Kong fell 4.3%. “The travel ban from Europe has definitely taken everyone by surprise,” said Khoon Goh, head of Asia Research at ANZ in Singapore. “Already we know the economic impact is significant, and with this additional measure on top it’s just going to multiply the impact across businesses. This is something that markets had not factored in … it’s a huge near-term economic cost.”