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If Trump starts trade war
Given the painful history of the 1930s, when a trade war sent the world economy into the Great Recession, and realizing that free trade and globalization have given the world economy greater prosperity, it is unthinkable that any leader would think waging a war against these trends is good.
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US President Donald Trump takes part in a meeting with bipartisan members of Congress on school and community safety in the Cabinet Room of the White House on February 28, 2018 in Washington, DC. (AFP/Mandel Ngan)
"Trade wars are good, and easy to win,” United States President Donald Trump declared in a tweet recently. His tweet was used to justify his plan to slap a 25 percent tariff on steel and 10 percent on aluminum imported to the US.
When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!
— Donald J. Trump (@realDonaldTrump) March 2, 2018
Trump was the first leader to break a taboo. Given the painful history of the 1930s, when a trade war sent the world economy into the Great Recession, and realizing that free trade and globalization have given the world economy greater prosperity through high and sustained economic growth over the last four decades, it is unthinkable that any leader would think waging a war against these trends is good.
The tariff increase on steel imports might help the inefficient steel industries in Ohio and Wisconsin and secure jobs for their workers, but it might not be good for the US economy as a whole. Many US industries use steel as a raw material: automobile, aircraft, machinery, equipment, construction, consumer durables, you name it. And when steel prices increase, prices of these products will go up as well. Their export would be less competitive, and higher prices would reduce demand domestically that could curb US growth, and with it global economic growth.
