During his three years in office, an America First Donald Trump has not been known for promoting international economic cooperation and providing world economic leadership. Nor has he been known as one to promote a bipartisan approach to address the nation’s pressing economic challenges. 

Unfortunately, in last night’s Oval Office speech, Trump offered nothing to suggest that his approach to economic policy has changed. 

Not only did he seem to go out of his way to antagonize his European counterparts by imposing a thirty-day European travel ban and by intimating that the Europeans were at least partially responsible for the coronavirus epidemic. 

He also seemed to eschew a bipartisan approach to providing the U.S. economy with much-needed fiscal policy stimulus. He did so by insisting on his payroll tax cut proposal as the only way to provide such stimulus and by forgetting that he very much needs the support of a Democrat-controlled House of Representatives to get any fiscal package approved.

Trump’s failure last night to offer international leadership and to reach out across the aisle was not lost on the markets. Indeed, rather than being reassured as Trump had intended, the U.S. stock market plummeted at a pace with few historical precedents.

By now, it should be clear that the coronavirus epidemic has upended the global economy. China, the world’s second-largest economy and until recently the world’s main engine of economic growth, has been put into the economic equivalent of a cardiac arrest. This has had the effect of interrupting global supply chains, precipitating a collapse in international commodity prices, and seriously dimming the economic prospects of China’s Asian trade partners. 

More troubling yet for the U.S. and global economies are clear signs that the global equity and credit bubble spawned by years of ultra-easy monetary policy may now have finally burst. 

The U.S. stock market, up until now Trump’s favorite indicator of the U.S. economy’s strength, has plummeted by around 30 percent. This has destroyed almost US$9 trillion in U.S. household wealth, which if sustained in itself could shave almost 2 percent from US GDP growth.

With international oil prices collapsing, it would seem only a matter of time before the heavily indebted U.S. shale oil industry starts defaulting on its loans. It would also seem to be only a matter of time before the heavily indebted emerging market corporate sector and the troubled international airlines encounter serious debt-servicing problems. 

Past experience with global credit crunches is that they tend to greatly amplify economic downturns by starving companies of credit at the very time that they most need it. One would think that this has to be of major concern to U.S. policymakers particularly at a time that the stock market troubles are dealing the U.S. consumer with a severe body blow and that the U.S. travel and entertainment sector is reeling from the population’s fear of getting infected with the virus.  

Among the lessons that should have been learned from the 2008-2009 Great Economic Recession, is that the favorable resolution of a global economic crisis is best done in an internationally coordinated manner with bipartisan political support. However, for such coordination to occur it would be vital that the U.S. offered the kind of decisive leadership to the world community that it has offered in previous such global economic crises. It would also be necessary that Trump put politics aside when trying to seek solutions to the country’s daunting economic challenges. 

In October 2008, it took a large fall in the U.S. stock market to get Congress to reverse its earlier rejection of the Troubled Asset Relief Program. Hopefully, the resounding thumbs down that Trump’s Oval Speech has received from the markets will wake Trump up to the need for bipartisanship and international leadership in these pressing times. If it does not, we should brace ourselves for the hardest of U.S. and global economic landings.   

Desmond Lachman is a resident fellow at the American Enterprise Institute. He was formerly a deputy director in the International Monetary Fund's Policy Development and Review Department and the chief emerging-market economic strategist at Salomon Smith Barney.

Image: U.S. President Donald Trump speaks about the U.S response to the COVID-19 coronavirus pandemic during an address to the nation from the Oval Office of the White House in Washington, U.S., March 11, 2020. Doug Mills/Pool via REUTERS.