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Economy

Trade war produces no winner(2)

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2018-03-08 08:39Xinhua Editor: Gu Liping ECNS App Download

"Someone who talks so much about fair trade like President Trump should not resort to such unfair methods," said German Economy Minister Brigitte Zypries.

France also voiced its opposition to the move. Calling the planned duties unacceptable, French Finance Minister Bruno Le Maire warned of a coordinated European response, adding that "all options are on the table."

The EU is set to lay out plans on Wednesday to strike back against the U.S. move. European Commission President Jean-Claude Juncker said, "We will now impose duties on motorbikes, Harley-Davidsons, on jeans, Levi's, on bourbon ..."

"We will not sit back and watch idly while our industry is hit by unfair measures which endanger thousands of European jobs," he added.

Meanwhile, the United States' largest trading partner, China, has pointed out that the practice will damage multilateral trade mechanisms represented by the World Trade Organization (WTO) and have a huge impact on the normal international trade order.

"If the final measures of the United States hurt Chinese interests, China will work with other affected countries in taking measures to safeguard its own rights and interests," said a Chinese Ministry of Commerce statement.

"We hope the U.S. side respects the authority of the multilateral trade system, works with other countries to maintain the normal global trade order and consolidates the foundation for world economic recovery," it added.

A TRADE WAR SEES NO WINNERS

With the United States retreating to the stronghold of protectionism and nationalism, concerns about a trade war are rising around the globe.

"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," Trump tweeted one day after the announcement.

But his optimism is shared by few. Noting that the potential for escalation of tensions is real, WTO Director-General Roberto Azevedo said that "a trade war is in no one's interests."

"American trade protectionism -- even in the periods most often cited as 'successes' -- not only has imposed immense economic costs on American consumers and the broader economy, but also has failed to achieve its primary policy aims and fostered political dysfunction along the way," said Scott Lincicome, an international trade attorney.

"In no case can it confidently be said that American protectionism was a substantial cause of American prosperity or the flourishing of protected U.S. industries," he said in a recent study titled "Doomed to Repeat It."

Lincicome said import restrictions most often turn to abject failures, and impose massive costs on U.S. consumers, workers and companies without achieving their intended objectives.

"With increased U.S. integration into the global economy, and new U.S. trade agreement obligations, these historical failures would only be exacerbated today," said the trade expert.

For Stephen Roach, former chairman of Morgan Stanley Asia and the firm's chief economist, raising tariffs manifests the Trump administration's narrow fixation on an outsized bilateral trade imbalance with its partners, including China.

Lacking domestic savings and wanting to consume and grow, America must import surplus savings from abroad and run massive current account and trade deficits to attract foreign capital, he said in a recently published article, describing it as the root cause of the U.S. trade imbalance.

"Consequently, going after China, or any other country, without addressing the root cause of low saving is like squeezing one end of a water balloon: the water simply sloshes to the other end," he said. "In this context, protectionist policies pose a serious threat to America's already-daunting external funding requirements -- putting pressure on U.S. interest rates, the dollar's exchange rate, or both."

The Smoot-Hawley Tariff Act made the Great Depression worse for the United States than it might otherwise have been, mainly by inciting protectionist retaliation against U.S. exports and creating a climate of economic nationalism around the world.

"Sadly, one of the most painful lessons of modern history has been all but forgotten," said Roach.

  

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