The Trade Warring Will Continue Until Morale Improves
What’s better and easier to win than a trade war? How about two trade wars?
Before it’s all over, President Donald Trump might have three, four or more trade wars going. For now, he’s got one with China and threatened to open another with Mexico – not because Mexican trade is so unfair, but to make Mexico stop immigrants crossing U.S. borders. Stocks tumbled on this fresh affront to free trade, capping a grim month. At a time of global economic uncertainty caused partly by Trump’s China hostilities, this raises the risk of a recession, notes Bloomberg LP founder Mike Bloomberg. It should also, Mike writes, be the last straw for Congress, which is constitutionally in charge of the nation’s trade, a power it has ceded to Trump. He is abusing it and sowing chaos, Mike writes: “Trump’s willingness to gamble with the country’s prosperity, and that of one-time friends and allies, is greater than previously supposed.”
A painstakingly generous interpretation could be that Trump is making the game-theory move of credibly threatening to be irrational, writes Karl Smith. And this might work, provided everybody else in the game is rational. Then Trump’s stop-me-before-I-tariff-again act could give him everything he wants, from Fed rate cuts to a China surrender, Karl writes. If not, then brace for disaster…
...because Trump risks blowing up trade relations with America’s second-biggest export market
Comments