Trump's shooting himself in the foot

DH News Service, Bengaluru, Mar 14 2018, 00:53 IST

US President Donald Trump's imposition of steep tariffs on imported steel and aluminium has provoked vows of retaliation from producing countries. While Trump's immediate target is China, by announcing that higher tariffs would be imposed against Canada and Mexico, too, unless they bend to American demands for renegotiation of the North American Free Trade Agreement, he has risked setting off a global trade war, the reverberations of which will be felt across Europe, Asia and Africa. Trump invoked Section 232 of the US Trade Expansion Act of 1962 for his tariffs. The law supports raising tariffs on imports in the name of national security, a ground that does not exist in the present case and is being misused in violation of international trade treaties. Nor will Trump's trade war remain confined to steel and aluminium tariffs. He is already talking about steeper tariffs on European car imports. India has found mention in several remarks made by Trump on trade in recent weeks. He believes Indian tariffs are high and has threatened to impose reciprocal tariffs on Indian goods.

During his recent speeches, he has given several clear indications that the US is itching to unleash a wave of trade wars, shaking free trade and globalisation to its roots. His tweet - "trade wars are good and easy to win" - reflects the mindset behind the misadventure. Perhaps Trump should take a look at what happened when his predecessors George W. Bush and Barack Obama imposed trade restrictions: they did the US more harm than good. His own indiscriminate "machine gun firing" will do much worse, especially because it will not address his problem with China, but Europe and Canada will be hit, thanks to Chinese transhipments from there. Within hours of Trump propounding his tariffs in a tweet, the European Commission hit back threatening retaliation: extra tariffs on everything from orange juice to Harley-Davidson motorbikes.

Since the end of World War II, the US and its allies operated on the consensus that trade offers a potent form of inoculation against the outbreak of military hostilities as well as hope for reviving and uplifting economies around the world. They built an economic and security order around the notion that communities connected by commerce have a shared interest in increasing prosperity and maintaining peace. They forged institutions focused on reducing tariffs and other impediments to trade, with the World Trade Organisation as the linchpin. But now this collective understanding is under assault by the very power that has so far championed it most fervently €" just as China and India rose, living by those rules. Chinese President Xi Jinping has already sought to take the mantle of globalisation's leader from America. Trump is mindlessly hastening the process.

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