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Home / Carpe Diem / What was that again about trade wars being ‘easy to win,’ especially if China pledges to ‘fight to the end’? – Publications – AEI

What was that again about trade wars being ‘easy to win,’ especially if China pledges to ‘fight to the end’? – Publications – AEI

Summary:
AEI What was that again about trade wars being ‘easy to win,’ especially if China pledges to ‘fight to the end’? 1. From today’s Wall Street Journal editorial board: The trouble with trade wars, like shooting wars, is that once they start you never know how they’re going to end. The enemy gets a vote, and sometimes events escalate in ugly fashion (see cartoon above). Take Friday, which saw China retaliate for Donald Trump ’s recent tariffs, Mr. Trump blow a gasket, markets tank, and Mr. Trump impose even more tariffs. Stocks took that news in stride. They then rose modestly after Federal Reserve Chairman Jerome Powell said in his annual Jackson Hole remarks that the central bank would “act as appropriate to sustain the expansion.” But then Mr. Trump began tweeting like a bull in a china

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What was that again about trade wars being ‘easy to win,’ especially if China pledges to ‘fight to the end’?

What was that again about trade wars being ‘easy to win,’ especially if China pledges to ‘fight to the end’? - Publications – AEI

1. From today’s Wall Street Journal editorial board:

The trouble with trade wars, like shooting wars, is that once they start you never know how they’re going to end. The enemy gets a vote, and sometimes events escalate in ugly fashion (see cartoon above). Take Friday, which saw China retaliate for Donald Trump ’s recent tariffs, Mr. Trump blow a gasket, markets tank, and Mr. Trump impose even more tariffs.

Stocks took that news in stride. They then rose modestly after Federal Reserve Chairman Jerome Powell said in his annual Jackson Hole remarks that the central bank would “act as appropriate to sustain the expansion.” But then Mr. Trump began tweeting like a bull in a china shop. “My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?” he tweeted, as if Mr. Powell isn’t a patriot. “We don’t need China and, frankly, would be far better off without them. Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME.”

Order? Somebody should tell Chairman Trump this isn’t the People’s Republic of America. U.S. businesses have been trying to shift production out of China to avoid tariffs, but supply chains that have been developed over decades can’t be uprooted overnight. And no other country has China’s huge relatively skilled workforce, infrastructure and network of suppliers.

U.S. motor vehicle jobs have declined by 16,000 this year amid a slowdown in domestic sales. Tesla, BMW and Daimler plants in the U.S. that export luxury cars to China will get whacked with tariffs come December. Farmers who have been bearing the tariff brunt will receive another dose of pain in September.

What was that again about trade wars being easy to win?

2. From today’s South China Morning Post China pledges to fight trade war ‘to the end’ and hits back at Donald Trump’s ‘barbaric’ tariffs“:

China on Saturday said it would continue fighting the trade war with the US “until the end” after the two sides slapped further tariffs on each other’s goods.The commerce ministry issued a statement calling on Washington not to “misjudge the situation and underestimate the determination of Chinese people” after US President Donald Trump announced new tariffs on Chinese imports. “The US should immediately stop its wrong action, or it will have to bear all consequences,” the statement said. A sharply worded commentary by official mouthpiece People’s Daily meanwhile said China had the strength to continue the dispute and accused Washington of sacrificing the interests of its own people.

It said China’s own tariffs on US$75 billion worth of American products, announced late on Friday, were a response to America’s unilateral escalation of the trade conflict, adding that China was determined to fight back “until the end.” “China’s will to defend the core interests of the country and the fundamental interests of the people is indestructible, and will not fear any challenge,” the commentary said. “History will prove that the side on the path of fairness and justice will have the last laugh.”

Brian Dodge, chief operating officer of the Retail Industry Leaders Association, said Trump’s continued escalation of tariffs had already rattled the US market. “Mr. President, we implore you to end this trade war before the damage is irreversible,” he said. “If uncertainty spreads from Wall Street to Main Street, the record expansion we’re enjoying will undoubtedly come to an end and it will be the American consumer, not China, who will suffer.”

MP: As the Wall Street Journal asks appropriately, “What was that again about trade wars being easy to win?”– especially if China now pledges to fight Tariff Man’s trade war to the end, and “the end” is a US recession in 2020 that jeopardizes Trump’s re-election.

What was that again about trade wars being ‘easy to win,’ especially if China pledges to ‘fight to the end’?
Mark Perry

Mark Perry
Mark J. Perry is concurrently a scholar at AEI and a professor of economics and finance at the University of Michigan’s Flint campus. He is best known as the creator and editor of the popular economics blog Carpe Diem. At AEI, Perry writes about economic and financial issues for American.com and the AEIdeas blog.

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