Trump’s trade war: A tale of the US grasshopper versus the Chinese ant
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Subscribe to enjoy similar stories. The world is still to recover from the shock of US tariffs (held temporarily) on Canada, Mexico and China, their retaliatory moves and the risk of American tariffs on other trading partners. America runs trade deficits with about 100 countries.
While there was always a possibility Donald Trump might impose steep tariffs on friends and competitors alike if voted to power, the common belief was that he was not serious about them, and that such Trumpian bluster was just his transactional style. Given the dystopia their continuation entail, there is still a distinct possibility that these tariffs might be abandoned once Trump achieves his real objectives, whatever these might be, before inflation kicks in and US demand as well as growth weaken. But there also appears to be a constituency in the US that believes if they cannot compete with China, as also Mexico, Canada and other countries with which it runs trade deficits, it is better to wreck globalization.
America seems to suffer from what Stephen Roach described as a “trade deficit disorder," induced by a macroeconomic imbalance—its deficit of savings—for which there is no bilateral fix. The deficit would just shift to other (higher-cost) producers. Many believe it was the retaliatory steps and cascading effects of the US Smoot-Hawley tariffs that tipped what was originally a deep recession into the Great Depression of the 1930s, which provided the backdrop to World War II.
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