What will the world look like in the wake of US President Donald Trump’s latest trade war? At best, it will see a collection of contrite nations trying to restore mutual economic relations in the wake of a great economic fiasco. At worst, it will be a world that makes the devastation wrought by the previous world wars look insignificant by comparison.
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The first of these scenarios seems to be more likely, but the latter cannot be ruled out. Once countries enter trade wars, they cannot easily back out without losing face. The resulting protectionism then leads to generalised economic slowdown, stagflation and unemployment, from which an arms race and physical conflict can be but a short step.
At this early stage, it is still possible to view the Trump tariff fusillade against Canada, Mexico and China as part of a “phoney war” which will bring no serious clashes. Deals can be done and fights averted, some might claim. However, phoney wars can be precursors to real wars.
At first glance, it might appear that Trump has not just mastered “the art of the deal” but also turned trade diplomacy into a kind of martial art, using tariff threats to cow opponents into making concessions in other areas. That is all well and good for the moment – and might even be applauded if it is limited to stemming the flow of illicit narcotics and illegal immigration – but intimidation creates resentment and is no substitute for genuine diplomacy and negotiation.
One might apply a nautical analogy to the progress of Trump’s latest tariff exercise. Bound for the golden shores of “Make America Great Again”, the Good Ship USA is tacking furiously from left to right, going first full steam ahead and then into reverse as it continues along its erratic course. It is hard to tell whether the captain is a brilliant steersman or simply drunk at the helm.
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If this is intended to confuse rivals or opponents, then it is succeeding. However, it is also confusing allies who are threatening to form their own flotillas or even sail away from the United States. This development could leave the US adrift on an ocean of isolation or an island of protectionism.