Tag: free trade

Alternative Fact: Trade Wars

Alternative Fact (from Trump’s Twitter @ dark-o-clock today): “When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!”


Real fact: Not buying a billion dollars of stuff from country X does not mean said “stuff” will now be produced domestically (assuming the domestic capacity and raw materials to produce the “stuff” exist). It may well mean we’re paying for a few cents more (bad for people with limited income streams) to source the “stuff” from country Y (until Trump sufficiently offends them too and we have to move on to country Z at yet another slight cost increase).

Retaliatory actions significantly reduce American exports too (see: Bush 2’s steel tariff a year or so into his presidency). So maybe you’ve managed to reduce the trade deficit with country X. You’ve increased the overall trade deficit twofold: we’re paying more for our imported “stuff” AND the targeted countries (and possibly non-targeted countries) are buying less from us.

Now theoretically slapping wide-spread tariffs on everything sourced from everywhere would be an easy trade war to win – assuming you want to restrict your country to domestic markets (again, retaliatory action). I expect that means domestic corporations with international operations would spin off international divisions. An ugly mess … and probably why the stock market reacted so poorly yesterday.

Bonus real fact: China isn’t our biggest trading partner for steel or aluminium. That would be Canada. And the EU. Both of whom, I must assume, will object to the tariffs (again, see Bush 2 in 2002)