The US moved to impose protectionist tariffs on steel and aluminum imports of 25% and 10% respectively, setting off global fears that Trump is about to unleash a trade war against the world.
Adding credence to this prediction is that the American President even tweeted late last week that “trade wars are good, and easy to win”, which prompted China and the EU to warn the US that they’ll retaliate against its companies if their interests are threatened by this move. Not one to back down, especially to the Europeans who he’s previously mocked as “socialists”, Trump dug in and tweeted back that “If the E. U. wants to further increase their already massive tariffs and barriers on U. S. companies doing business there, we will simply apply a Tax on their Cars which freely pour into the U. S.”
The transatlantic tiff is taking place precisely at the moment that the US is renegotiating NAFTA with its Canadian and Mexican partners, and it’s impossible to separate the two theaters of what might soon become a global trade war. The Trump Administration has voiced concern that third-party countries exploit NAFTA by using the US’ free trade neighbors as transshipment points to the American marketplace in order to stealthily evade whatever restrictions Washington might have implemented in their bilateral trade relations, which is one of the reasons why the US is renegotiating the agreement in order to fix these backdoor loopholes. Another factor to keep in mind is that Trump wants to lessen the US trade deficit with China, and that his proposed steel and aluminum tariffs might just be the opening salvo in a much larger and comprehensive strategy aimed against the People’s Republic.
Bearing this backdrop in mind, the world’s three largest economies — NAFTA, the EU, and China — are closer than ever to a trade war, one which would expectedly have serious implications for the rest of the world as well. The era of free trade appears to be drawing to an end and an “America First”-led trend towards semi-protectionist “fair trade” is emerging in its place, one which has the potential to completely upend both the previous US-centric model of Western Globalization and the upcoming Chinese-pioneered one of Silk Road Globalization, thus leading to an unprecedented period of uncertainty during the interim. It’s anyone’s guess what happens next, and there’s of course the chance that nothing more might happen at all, but knowing Trump, he probably has a master plan in mind that he’s just itching to execute and probably will.
