Tell Me How This Trade War Ends: The Right Way to Build a New Global Economic Order

3 comments

1. [SS from essay by Emily Kilcrease, Senior Fellow and Director of the Energy, Economics, and Security Program at the Center for a New American Security. From 2019 to 2021, first in the Trump administration and then in the Biden administration, she was Deputy Assistant U.S. Trade Representative for Investment; and Geoffrey Gertz, Senior Fellow in the Energy, Economics, and Security Program at the Center for a New American Security. From 2022 to 2023, he was Director for International Economics on the U.S. National Security Council.]

   On April 2, a day he dubbed “Liberation Day,” President Donald Trump stood in the White House Rose Garden and announced a sweeping new program of tariffs intended to rebalance U.S. trade. Trump’s tariff rates were shockingly high, triggering a stock market selloff and a flight away from U.S. assets, rare rebukes from some Republicans in Congress, and diplomatic outrage around the world. After a week of mounting backlash, the president announced a 90-day pause on most of the country-specific tariffs, leading foreign counterparts to scramble for deals that would allow them to escape the levies before the clock ran out. U.S. court rulings questioning the legality of the president’s tariffs have added further uncertainty.

   The Trump administration’s trade policy chaos has already caused harm, slowing growth, raising prices, and sparking dire predictions about the fate of the world economy. Yet there is a kernel of truth in the president’s insistence that the international trade system needs a reset. Distrust of free trade has been rising in both political parties in the [United States](https://www.foreignaffairs.com/regions/united-states). Governments around the world are more and more willing to intervene in their economies to safeguard national interests. The U.S.-led global trading order, constructed over eight decades following World War II, has frayed.

2. People tend to forget, take things for granted. Perhaps we need a few decades without global trade to wake people up again.

3. Humanity is not yet at a stage for peaceful coexistence and cooperation on a global scale. Way too much ongoing conflicts. Very high chance of future conflicts. It’s only Europe that has learned to coexist in relative harmony after WWII. India became a country from a Europe like subcontinent of warring provinces only after the British. Rest of Indian subcontinent relations are tumultuous. Europe – Russia relations are volatile. Much of Africa is simmering. The middle East. So we as a civilization are far from world peace.

   It is more pragmatic to eliminate economic dependencies on potential rivals. Any strategic dependency can and will be used as a lever. Europe gets nauseous when Trump threatens withholding whatever. China can bring to a halt the economy of any nation that goes against it. They just need to restrict exports from key suppliers – not that hard to accomplish.

   It’s like the rise of the populist right. We can virtue signal and pretend righteousness all we want. But the votes speak for themselves.

   Trump’s just going about it in a very haphazard self centred fashion. Perhaps he doesn’t know better. Possibly manipulating the markets to his benefit in the process. Perhaps it’s a task no stable leader could have embarked upon. Disruption is always ugly.

Comments are closed.