Trump’s reckless behavior just forced China to take unprecedented measures in response

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America’s president has started a full-scale trade war of the kind that led to the Great Depression of the 1930s. 

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Trump’s unilateral imposition of tariffs against the European Union, Mexico, Canada and others were skirmishes but with the 25 percent tariffs on Chinese electronics and other goods announced today a full-scale global trade war is underway that is already sinking the stock market and could lead to a worldwide economic recession.

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The Chinese today said there have been no talks to resolve this in advance and they will respond with their own tariffs on American products and services in equal or greater measure.

“This is detrimental to the vital interests of China and even more detrimental to the common interests of the world,” Gao Feng, spokesman for the Chinese Ministry of Commerce said at a press conference today in Beijing.

“Facing such a major issue, we must fight resolutely,” Gao said. “Even though we are not the ones to stir up trouble, we will resolutely strike.”

The Chinese are doing what the European Union and Canada are already doing.

On May 31, the Star of Toronto reported that after Trump put new tariffs on our Northern neighbor, “Canada hit back…by announcing tariffs on dozens of U.S. products in retaliation for American steel and aluminum tariffs that Prime Minister Justin Trudeau called a ‘turning point in the Canada-U.S. relationship.'”

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In his statement today Trump made it clear if they respond so will the U.S. leading to further escalation that will heighten the tension and likelihood of a global financial meltdown. 

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“The United States will pursue additional tariffs if China engages in retaliatory measures,” announced Trump, “such as imposing new tariffs on United States goods, services, or agricultural products; raising non-tariff barriers; or taking punitive actions against American exporters or American companies operating in China.”

Trump has said he thinks trade wars are easy to win. Remember this tweet from March when he first started unilaterally imposing tariffs on steel and aluminum?

History, unfortunately, shows trade wars, like wars fought with guns, have a way of getting out of hand and being more destructive and lasting longer than anyone can anticipate. 

Consider the biggest trade war in American history and its result – the Great Depression.

In 1930, the U.S. Congress passed the Smoot-Hawley Act, which was meant to protect farmers, but soon led to tariffs on all sorts of goods.

Other nations, including Canada, responded with their own tariffs on American goods.

U.S. exports fell 40 percent in the two years after Congress passed that act.

That may not have been the only reason for the Great Depression but it was, by all accounts, a major contributing factor.

What happened? Unemployment soared, banks failed, industry was stalled and social problems and crime followed.

Chris Cillizza of CNN in March asked Trump’s trade adviser Peter Navarro if the president’s tariffs would have a similar impact?

He insisted it was into the same. He said Smoot-Hawley was a “protectionist” tariff and Trump, responding to years of unfair trade agreements, was making “defensive” moves.

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Cillizza then turned to William Dudley, president of the New York Federal Reserve, who in a speech said that tariffs like those being imposed by Trump were “a dead end” and “destructive.”
Cillizza noted that President Obama used tariffs to protect American tire makers from Chinese competition in 2009, and it did save about 1,200 tire jobs – but it also resulted in the loss of about 3,700 jobs at retail, according to an analysis by the Peterson Institute for International Economics.

It also had the effect of raising the cost of tires for Americans, which
Republican Nebraska Senator Ben Sasse said is actually a “massive tax increase on American families.”

So at a time income equality among Americas is worse than it has ever been, wages for most U.S. workers are stagnant or even falling, interest rates are rising and inflation is suddenly soaring, Trump’s tariffs will make it even more expensive for consumers, while farmers and manufacturers can expect to see their international sales fall dramatically. 

President Trump may be able to claim winning a trade war is easy from his comfortable potions as a billionaire living in the White Hosue, but for most Americans, and many others around the world, this is a disaster that will have many unforeseen repercussions.
Thanks to the momentum built under President Obama the U.S. economy has been strong, unemployment has fallen and the stock market was rising but that will now all change for the worse.

Trump may think he can win this “trade war” but the casualties will be American consumers and workers, as well as those in other countries because there is no win-win when one side is a bully determined to make all their oldest friends into enemies. 

Benjamin Locke

Benjamin Locke is a retired college professor with an undergraduate degree in Industrial Labor and Relations from Cornell University and an MBA from the European School of Management.

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