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Illustration: Lazaro Gamio/Axios

Look for global stock markets to crater and economies to dive into recession if President Trump proceeds with his desire to withdraw from another international accord — this time the World Trade Organization, economic experts tell me.

The big picture: Thus far, Trump has mostly damaged U.S. prestige with his anti-globalization actions, including withdrawing from the Trans-Pacific Partnership and the Paris climate agreement, as well as threatening to pull out of NAFTA. He's also caused global stock markets to gyrate by imposing tariffs on Canada, Europe, and China; and oil prices to rise by pulling out of the Iran nuclear deal. But "the financial shock would be very, very large" should he withdraw from the WTO, said Gary Hufbauer of the Peterson Institute for International Economics.

What they're saying:

  • "Business confidence in the system would be severely shaken," Hufbauer told Axios, and there would be "quite a hit" to long-term investment in plants and equipment. "You don't need much of a slowdown in these areas, and you have recession."
  • "If he persists, if this is more than bluster or a negotiating ploy, he is putting the prosperity of the world at risk," said Brookings' David Wessel.

The backdrop: Last week, Axios' Jonathan Swan was leaked draft legislation, ordered by Trump, that would abandon key tenets of the WTO. Swan's sources tell him that Trump routinely vows to withdraw entirely, and on Monday, the president publicly threatened that "we will be doing something" should the WTO not "treat us properly."

  • The White House seems to be showing little understanding of the WTO's history, originating in 1947 along with the World Bank and the International Monetary Fund as vehicles to prevent any future global war by buoying the economies of the world.
  • What specifically bothers Trump: Analysts say he's bothered by the fact that the WTO still treats China as a developing country, and wants that to change.

But but but: While Eswar Prasad, a professor at Cornell University, expects a huge fallout, he suggests it will be more muted than a full-scale economic reversal.

  • "Trump’s repudiation of the WTO could prove a body blow to the rules underpinning the global trading system," Prasad tells me. "The prospect of that and further disruption could hurt the stock market, but is unlikely to derail U.S. growth momentum sufficiently to tip the economy into recession."

What to watch: The first signal of what's to come will be Friday, when stiff tariffs ordered by Trump on China take effect, following steel tariffs already enacted on Europe and Canada, along with reciprocal tariffs on the U.S. That is, unless Trump halts U.S. action at the last moment, which some suspect he will.

What's next: While this already looks like trade war, more is still ahead. Trump has threatened tariffs on another $400 billion in Chinese products should it retaliate against the U.S. If that happens, look for Beijing to respond harshly, perhaps by disadvantaging U.S. companies operating in China.

Other potential impacts:

Go deeper

2 hours ago - World

India sets new COVID world record as oxygen demand jumps seven-fold

COVID-19 patients being treated with free oxygen at a makeshift clinic in Indirapuram, Uttar Pradesh, India. Photo: Rebecca Conway/Getty Images

India has seen demand for oxygen jump "seven-fold" as the country set a new world record for daily COVID-19 cases on Thursday, per AP.

By the numbers: India's health ministry reported 412,262 new infections, taking the official tally past 21 million, and 3,980 deaths from the coronavirus in the past 24 hours. The official death toll now stands at 230,168. The actual numbers are believed to be much higher.

4 hours ago - World

U.K. sends patrol ships to British island amid fishing dispute with France

The HMS Tamar, one of the two ships deployed to Jersey. Photo: Finnbarr Webster/Getty Images

The United Kingdom's government announced Wednesday it has deployed two Royal Navy patrol vessels to the island of Jersey "as a precautionary measure," as tensions over fishing rights escalate with France.

Why it matters: British Prime Minister Boris Johnson said in a statement the government took the action to protect Jersey against potential threats of "a blockade" of French fishing boats at the island, which is off the coast of northwest France.

Social media's "in-kind contribution to Biden"

Photo illustration: Annelise Capossela/Axios. Photo: Mark Wilson/Getty Images

Facebook's continued suspension of Donald Trump's account extends the silencing of Joe Biden's most potent critic — and the current president's control over the national political narrative into his second 100 days.

Why it matters: Biden has been able to successfully focus on COVID-19 relief, his infrastructure plan and fielding his new administration, in part, because Trump hasn't been able to shake his social media muzzle and bray about the migration crisis or any White House misstep.