TRADE
Steeling for trouble
Rising trade tensions threaten the global recovery and risk a return to the dog-eat-dog world of protectionism
US president Donald Trump has backed up his decision to levy punitive tariffs on steel and aluminium imports into the US with the tweet: "Trade wars are good and easy to win." This assertion is rejected by trade experts and elements in Trump’s own Republican Party, as well as evidence from past US experiments with trade protectionism. In Trump’s view, the US trade deficit is caused by "cheating" trade partners and currency manipulators, including China, Mexico, Japan and Germany. In 2016, the US trade deficit with China was US$347bn. This is because the US imports four times more from China ($463bn) — mostly consumer electronics, clothing and machinery — than it exports to China ($116bn). However, a lot of these "Chinese" imports actually originate from US manufacturers that send raw materials to China for low-cost assembly. This allows them to sell the finished item back home at lower prices, to the benefit of US consumers and retailers. In a trade war "there will be no clear winne...
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