Trump's tariffs apparently unstoppable

Trump is not entirely wrong in claiming that "trade wars are easy to win", taz comments:

“At least for the United States they are. Because the US is barely participating in globalisation: exports account for just 12 percent of its economic output, and imports for just 14.7 percent. The US is de facto a continent of its own. With around 320 million inhabitants its domestic market is huge - and it doesn't really have to rely on trade partners. So it can afford a little trade warfare. ... Reagan and Bush Jr. waged limited trade wars too. For instance against Toyota and Asian chip manufacturers. It didn't do any good, and even hurt US consumers, because prices rose. But Reagan is still popular today - and Trump wants to be too.”

Starting a trade war is the dumbest thing Trump could do, Paul Krugman counters in a commentary piece in Il Sole 24 Ore:

“So the idea that a trade war would be 'good' and 'easy to win' is surprisingly stupid. And the way Trump seems to be starting his war is also remarkably stupid: start by protecting goods that are inputs to industries that employ far more people than those being protected? Do so in the name of national security - a justification that is, for good reason, almost never invoked - when the biggest source of those inputs is that hostile foreign power Canada? ... In themselves, these tariffs aren't that big a deal. But if they're a sign of what future policy is going to look like, they're really, really bad.”

Economist Thomas Piketty is worried less about trade wars than about social cohesion in the world:

“What menaces the world today is not economic but social war, fought with the heavy artillery of fiscal dumping measures which favour the richest and the most mobile. That makes the working classes' sense of having been abandoned and leads to the impoverishment of public authority: in all rich countries public capital is in the process of becoming negative, meaning that those who own private wealth also own the public assets (schools, hospitals, etc.) through their financial assets. ... A good example of this type of transfer took place not long ago in France: the rich were first given six billion euros per year in tax relief, then they were offered the option of buying the Paris airports for eight billion. It would have been simpler to just transfer the property for free.”

Trump is using a two-pronged approach to put Europe under pressure, observes La Repubblica's US correspondent Federico Rampini:

“Trump has let the European allies know that the US is prepared to look at what they have to offer it. ... This is an unmistakable allusion to another dispute: the inadequate contributions of many European countries to the Nato budget. Trump is indicating that he'll be more 'flexible' vis-à-vis those who increase their financial commitment to Nato. His ultimatum is extremely brief: they have 15 days to prevent the tariffs from taking effect. Trump is also talking about bilateral negotiations with individual countries, which contravenes EU rules because only the EU has the authority to negotiate trade agreements for all member states. Is this a case of inattentiveness? Incompetence? Or a deliberate attempt to divide the EU?”

The actual impact of Trump's tariffs policy is not as great as one may think and doesn't justify the belligerent rhetoric, Die Presse counters:

“[China and the EU] play only a minor role in US steel imports. Six percent comes from the EU, and just over one percent from China. Naturally the tariffs will have unpleasant effects for certain individual steel manufacturers. Of Germany's total exports volume of 1,279 billion euros steel exports to the US account for just over three billion. So just 0.23 percent. And that's supposed to be the first strike in a global trade war? Incidentally, Canada and Mexico, who together account for almost a third of US steel imports and are therefore the main suppliers, are explicitly excluded from the tariff policy.”

Instead of also reacting in kind with punitive tariffs Europe should take the opposite tack first, Der Tagespiegel writes:

“No matter how much you want to vilify Trump, he's right about one thing: Europe's tariffs are currently higher than those of the US. Whereas EU-based companies pay tariffs of 3.5 percent on average in the States, US firms have to shell out 5.2 percent here. And the difference is even more glaring with cars: German companies selling cars to the US pay tariffs of 2.5 percent, while US carmakers pay ten percent in the EU. So is it too much to ask that we meet the US halfway and lower tariffs instead of raising them? It's certainly worth a try. If it doesn't work out we can always retaliate with our own punitive tariffs.”

If Trump thinks that with his tariffs he can stop developing countries from catching up he is very much mistaken, the Daily Sabah rails:

“Developed countries, especially the U.S., did not observe the ideal of absolute liberalism while making anti-protectionist regulations. They thought that developing countries could not threaten them, especially in high-tech areas, and argued for liberalism in global trade accordingly. Meanwhile, they waged an implicit trade war between themselves, especially after the WTO was founded. ... Now this circle is breaking, and as developing countries catch up with the new industrial revolution, they are gaining a global competitive advantage. This constitutes the current dynamic of new trade wars. If the U.S. implements protectionism for steel and aluminum as President Donald Trump has put it, it will receive a response from developing countries.”

The departure of Trump's economic adviser Gary Cohn leaves the US president in a weakened position but could represent an opportunity for the EU, the Tages-Anzeiger comments:

“In Congress support for Trump on trade issues is particularly weak. So there is no reason for the EU to give in. It should see the void in the White House as a chance to take action. Not with banter about bourbon, jeans and peanut butter, but with the demand that the US resolve the differences through comprehensive new negotiations on a transatlantic trade area.”

The World Trade Organisation's Dispute Settlement Body would normally be tasked with resolving the trade dispute, but unfortunately the WTO itself has a problem, Il Sole 24 Ore complains:

“The US boycotted the new appointment of the members of the WTO's appellate body in the summer of 2017. ... Only four judges [out of seven] are currently active and they are having trouble coping with the large number of cases. In September the term of another judge comes to an end, leaving just three judges, the minimum number, in office. ... If the US continues to boycott new appointments the entire dispute settlement system could be left paralysed in December when the terms of two more judges come to an end. Looking back one might even suspect that the blockade of new appointments was a deliberate strategy to facilitate the measures the US is now planning', according to Giorgio Sacerdoti [member of the WTO Appellate Body until 2009].”

Trump's announced tariffs on imports are nonsensical from an economic point of view, writes economist Vitali Kusmin in Unian:

“Take metal imports. ... Today just under 70 percent of the major US metal consumers' demand is met by US firms. The remaining 30 percent is covered by imports. And that division is based on purely economic factors. The country's most ineffective metal production was simply replaced by imports. At the same time the remaining factories were modernised to be able to keep up with the competition. This is an entirely healthy economic development. ... The most Trump can achieve with his tariffs is to give individual, less effective companies, and not sectors, a second chance.”

The world's leading nation has lost some of its influence over the global economy, Die Presse comments:

“Of course Trump can start a total trade war if he wants to. In that case all the world's economies - including America's - will suffer. And for precisely that event six trillion dollars worth of US bonds are in Asian and European hands. If push comes to shove regardless of the losses, they could be used to create havoc on the US bond market and therefore in US state finances. ... In view of the activities of global monopolies like Google and Facebook that may seem questionable. For the time being, however, we must live with that. The Twitter king in the White House's fits of protectionism could even turn out to be a blessing in disguise.”

It is not Trump's measures that are the real problem, T24 concludes:

“A full discussion of whether Trump's reaction is appropriate or inappropriate must take place some other time. But the problem he is addressing is indeed a serious one. There is a problematic overcapacity in the steel and aluminium industry because China subsidises its own exporters. This is not just a problem for the US, but also a global problem. And it really needs a global solution. But because that isn't forthcoming, the US and other countries are taking a unilateral approach which, however, is only aggravating the problem.”

The current conflict shows that the economic crisis is still not over, Les Echos warns:

“The Americans have become bogged down in their protectionism. The Europeans are voting for all doors to be closed. One has a sense of déjà-vu. And not without good reason: such events also took place in the 1930s. Followed by other, even worse disasters. ... What has changed? ... Even if the patient has survived his heart attack, many arteries remain clogged. ... Debt levels have increased once again. The banks, businesses, and zombie states owe their survival to the extraordinarily low interest rates. As Trump's protectionism has shown, we haven't overcome the crisis, we've just spread it out over time.”

Trump failed to consider the impact export tariffs will have, Berlingske fears:

“Perhaps his core voters will be the hardest hit. ... They have always spent considerable sums on cheap imported goods. ... Many of Trump's voters have become victims of globalisation and lost their jobs. But that's also because the US hasn't bothered to open up new opportunities for those whose work has become superfluous. And unlike Denmark, the US has failed to ensure that some of the profits acquired through globalisation are distributed via the tax and social welfare systems. The US is against that approach for political reasons, and now free trade is being blamed for all society's ills.”

The tariffs are mainly having a propaganda effect, economist Konstantin Sonin observes in a Livejournal article reprinted by newsru.com:

“The political impact consists in Trump's voters getting a TV trade war in which he can be declared the winner. Trade wars are always a type of war which the leaders of both sides can win while the populations on both sides lose out.”

For Rzeczpospolita the conflict over US tariffs on European imports could jeopardise Poland's relations with the US:

“How is Poland supposed to react? On the one hand we want to maintain good relations with the US, but on the other hand the EU is our most important market. A trade war involving US tariffs for the European car industry would hit Poland hard. Although Poland doesn't export many cars directly to the US its close ties to the German car industry make it vulnerable. We can only hope that the US president will decide against such a move. Given the current tensions between the EU and the Polish government it's hard to say whether the EU would help our companies in the event of a crisis.”

No one will gain anything from an escalation, Turun Sanomat points out:

“The US's import duties raise the risk of a trade war. Although the focus right now is on deteriorated trade relations between the US and China, transatlantic relations could also suffer. There are no winners in a trade war. The danger of a trade war alone can contribute to economic inactivity. Finland's economy is growing once more after a long recession, but for us too, a trade war would have serious repercussions. Exports and a functioning global economy are vital for Finland.”

It's too early to announce the start of a trade war, columnist Sheila Sitalsing writes in De Volkskrant:

“If import duties on European cars really are raised there will still be a few technical questions to be resolved. ... Like for example whether this will also apply for the BMWs produced at the plant in Greer, South Carolina. That's the carmaker's second-largest plant, and its only factory in the US, where thousands of American workers make millions of BMWs every year. And how should Chrysler be classified? ... The Italians at Fiat bought it four years ago, its legal headquarters are in the Netherlands and its fiscal headquarters in Britain. It's not all that easy to make out a clear enemy for the trade war.”