How easy to win are trade wars?
Vainglorious boaster President Trump, having declared trade war against much of the developed world, assured us that trade wars are easy to win.
?? Maybe, and maybe not. I’m no economist, but I have noticed that the majority of mainstream economists and many business leaders have opined that trade wars are bad for everyone. They are particularly bad when they slow down the global economy as a whole, in an age where the global economy is increasingly THE economy that really matters in the long run.
On the other hand, seasoned economist Irwin Stelzer proposed that Trump’s trade war “really might be easy to win.” Stelzer on trade war
The basis of Stelzer’s conjecture is that the U.S. economy dwarfs that of any one of its economic adversaries (euphemistically called “trading partners”), excepting China, and they need the U.S. market more than the U.S. needs theirs. Secondly, if foreign tariffs really were as relatively disadvantageous to us as Trump claims (and Stelzer seems to agree), greater parity could put those foreigners on the ropes. As Stelzer points out, a German auto industry’s proposal to eliminate tariffs is a sign that some foreign businesses are seeing trouble ahead with the status quo. The status quo is that EU tariffs on U.S. automobiles have been five times that of the America’s on theirs.
Continue reading “Gambling with Other People’s Money: Trump Trade Wars”