10 March 2018   Leave a comment

There is still a great deal of ambiguity about the tariffs that President Trump has threatened on steel and aluminum.  He has, however, claimed that “trade wars are good, and easy to win”.  The historical record, however, does not support that characterization.  The essential point about trade wars is that tariffs almost invariably invite retaliation and the tit-for-tat responses raise prices and reduce demand.  Outside of Europe, most countries have held back in identifying specific retaliatory tariffs, but virtually every country has indicated that they will do so once it is clear how the US will implement its plans. One of the more interesting countries to watch is South Korea which has one of the most open trading arrangements with the US of any country outside of North America.  South Korea has already been harmed by the US tariffs on washing machines, and will suffer significantly if the steel tariffs are levied on its steel.   But the US also desperately needs South Korean cooperation in the ongoing dispute over North Korea’s nuclear program.

Trade wars are also related to actual military conflict.  Trade does not always bring peace, but trade disputes often escalate into actual conflict if there is a power disparity between the trading partners.   The Opium Wars between the British and the Chinese is perhaps the most obvious example, but there is also considerable evidence linking the trade wars in the early 1930s to the outbreak of World War II.  The US decision to halt petroleum and iron ore exports to Japan in the 1930s likely tipped the political balance to the war factions in Japan.

The British Iron-clad Naval Vessels Outmatched the Wooden Chinese Ships in the Opium Wars


We are still trying to determine the consequences of the decision by the Chinese Communist Party to allow President Xi Jinping to stand for another election.   Liberals bemoan the possible emergence of another authoritarian leader in the world who refuses to abide by norms that prevent personal power from determining the terms of governance.  But the Chinese seem to think that their model offers a viable alternative to the chaos usually associated with democracy.  Given the breakdown of democratic norms in the world at this point in time, there are many who are attracted to the possibility of a “Chinese model” for governance.


Patrick Smyth has written an op-ed piece for the Irish Times on the decline of social democracy in Europe.   Smyth has a panoramic view of European politics, including his interpretation of the recent Italian elections, and his argument is sobering:

“Like it or not the consensus politics of the postwar years are coming to an end, surviving perhaps only in the renewed, weakened German coalition of Angela Merkel and the Social Democrats (SPD). The changing times are manifest in the previously taboo willingness of politicians to bring far-right, sometimes openly fascist parties, into governments from Austria to Greece to Finland.”

The collapse of the left and center-left has paralyzed democratic politics, and now most voters view the choices as between right and far-right parties.  The problem is not so much that voters are attracted to the right-wing.  They do not believe that the left has any vision for the future.  Much of that disillusion has to do with the collapse of socialism in the 1990s.  But one would think that the legacies of the Great Recession would have energized, not eviscerated, the left.

Posted March 10, 2018 by vferraro1971 in World Politics

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