OPINIONS Trump's trade war casts clouds on world economy

OPINIONS

Trump's trade war casts clouds on world economy

By Wang Yi | People's Daily app

19:59, July 17, 2018

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US President Donald Trump likes to think big, but his government has definitely missed the big picture when launching and escalating the trade war with China and other key players in the world.

If the US tries benefiting at the world economy’s expense, maybe it should remember “what goes around comes around.”

Trump’s trade war has been broadly taken as a biggest threat to the world economy. The IMF’s updated World Economic Outlook warned that growth could be cut by half point by 2020 if tariff threats are carried out.

European Central Bank is concerned that if the trade confrontation between US and other countries develops into a global trade war, it will make a profound impact on world economy and employment.

The world’s misgivings are reasonable. Looking back on history, the last trade war was in the 1930s, which was also triggered by the US, and intensified the effects of the Great Depression.

Jacob Frenkel, the chairman of J.P. Morgan Chase International, said this April, "I think we should all remember the disaster of 1931 — always good intentions to protect American jobs, and the result was a catalyst to the Great Depression. We should avoid it at all costs."

It will not be different this time. Trump’s victim mentality might help him win the ballot of US voters who were left behind by globalization, but it is wrong and dangerous to carry it out this way.

In terms of the global industrial and supply chain, a majority of “made in China” exports are actually “made by the world”. China plays a core role in the chain, but the US is actually making a lot of money quietly. This is why most US multinational enterprises are so mad with Trump’s trade war.

Some other countries are not happy either, refusing to blink to the US’ bullying tactics this time. Contributions of the contemporary world trade system are obvious, helping boost the world economy as a whole. The US unilaterally provoked the trade war and stayed unrepentant with its protectionism doctrine, which not only hits normal international trade, but also undermines the global economic and trade order.

China, EU, Canada, Mexico, India, Turkey and other economies have launched countermeasures. The response of the international community has proved that Trump’s trade war is irrational, dishonorable and unrepentant bullying.

In today’s world, countries are interpenetrating and highly dependent in maintain their interests on each other. The recovery of world economy is not strong enough. Protectionism has turned into the key weak link, which might trigger a slowdown or even recession similar to that of the 1930s.

If Trump’s tariff decision triggers a world-wide economic disaster, the US will be the first to bear the brunt. US consumers’ demand would be hurt badly by inflation caused by the confrontation.

Damages to US industries and consumers will be mammoth. According to Moody’s estimate, a trade war will make the US lose 250,000 jobs, and the cost of living would rise $210.

As the No. 1 economy in the world, the US has not been the stabilizer but the source of chaos. After the subprime mortgage crisis, the US has launched 1,394 harmful trade protection measures to other countries. And Trump’s administration has adopted 143 measures in 2017. The “America First” policy has disrupted the world trade order.

All in all, what the US should always keep in mind is that “no country is immune to a world economy crisis.”


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