The gung-ho attitude of President Trump is that the USA would welcome trade wars with various (if not all) trading partners because for decades the US has had the short end of the stick in all its international trade deals (Brexiters beware!). Many would dispute this, not least because the USA as the world’s largest economy has had more economic clout than any of its trading partners and can press for arrangements which suit the USA. Mr Trump, stable genius and business colossus doesn’t see it this way. In his opinion, American trading might means that any trade war will be resolved in US favour and consequently, the US economy will be the winner. This is a simplistic view by any measure.
The World Trade Organisation (WTO) does not share Mr Trump’s view. They have cautioned that a US-China trade war could have severe impacts on the global economy, beyond the two main protagonists. Current US plans would see tariffs worth $50 billion applied to some Chinese imports with China set to retaliate against US exports.
Speaking on the BBC’s Hard Talk programme, Roberto Azevedo, WTO director-general, suggested that a trade war could cause a rapid decline in global trade. “If it’s just limited to steel and aluminium, it’s one thing. If you’re talking about hundreds and thousands of products, it’s a completely different thing. And the impact will be significantly different. I don’t think anybody believes that this is something minor, even in the US administration. These conversations are ongoing precisely because people are beginning to understand, I hope, how serious this is and the kind of impact this could have to the global economy.”
There is cautious optimism in the US that China and the USA will be able to come to an arrangement before matters escalate, but the US has lodged a complaint with WTO over intellectual property right violations that it believes China is guilty of. Mr Trump is a critic of WTO, having described it as a “disaster” and a “catastrophe” for the US.
Washington has also has launched a complaint against China for breaking basic patent rights rules at the WTO – a body that Mr Trump has said is a “catastrophe” and “a disaster” for the US.