2 March 2018   Leave a comment

Much of the world was highly critical of US President Trump’s announcement that the US would impose tariffs on imported steel and aluminum.  China was critical, but steel exports to the US account for only 2% of Chinese exports and China apparently wishes to hold its fire for a while.  Europe was highly critical.  According to The Washington Post:

“With this, the declaration of war has arrived,” said Bernd Lange, a German Social Democrat and head of the European Parliament’s trade committee, speaking on German public radio. “They have a mercantile trade model in their heads that dates back 200 years.”

The Europeans are threatening to impose tariffs on Harley-Davidson motorcycles, bourbon, and Levi jeans.  The more immediate problem for the US is that the countries most seriously affected are Canada, Mexico, and South Korea.  Damaging the Canadian and Mexican economies will definitely have a knock-on effect on the US economy.  South Korea is a strategic problem as well.  The US has been trying to stiffen South Korean resistance to North Korean overtures, but damaging the South Korean steel industry will make that task much more difficult.  However, it is still not clear what Mr. Trump plans.  His initial announcement was not cleared by his aides and may be changed.  He claimed that trade wars are “good” and “easy to win”.  History does not support that proposition.  Analyst Stephen Roach sums up the historical record well:

“Trade wars are for losers. Perhaps that is the ultimate irony for a president who promised America it would start “winning” again. Sen. Reed Smoot and Rep. Willis Hawley made the same empty promise in 1930, leading to protectionist tariffs that exacerbated the Great Depression and destabilized the international order. Sadly, one of the most painful lessons of modern history has been all but forgotten.”

 

The Italian general election is scheduled for Sunday and the polls suggest that Italians are deeply pessimistic about their future.  Right now the anti-establishment 5-Star Movement led by the former comedian, Beppe Grillo, seems to be leading in the polls but even its strongest supporters are not enthusiastic about the party.  The Pew Research Center ran a poll of Italian attitudes prior to the election and it suggests that the election will not likely resolve any of the major issues facing the third largest economy in the European Union.

 

Calamities ranging from drought to whitefly infestations have decimated farmers in the Punjab, the agricultural region of India.  According to the Asia Times: “A door-to-door survey in the districts of Sangrur, Bathinda, Mansa, Barnala, Ludhiana and Moga found that a total of 14,667 agricultural labourers and farmers committed suicide between 2000 and 2015.”  In response, Prime Minister Modi’s government is increasing prices to benefit the farmers, but the strategy will likely increase food prices in India dramatically.  Inflation in India is already at very high levels and the government does not seem to be able to halt the increase in prices.

Posted March 2, 2018 by vferraro1971 in World Politics

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