The trade war that President Donald Trump has launched on the United States’ most important trading partners is not a one-way street, writes Professor James Cooper forecasting that this situation is not going to end well.
In a recent op-ed for The Business Times, Professor Cooper explains that there is a reason why such policies carry the moniker “beggar thy neighbor.” No one wins. Consumers lose because imported products become more expensive. Companies lose because the costs of needed components increase, injuring their bottom lines. Workers lose as jobs move overseas as U.S. companies avoid the effects of punitive border taxes. Just ask laborers at Harley Davidson plants who are seeing their coveted jobs move to Europe, as announced last week. Or ask General Motors, the blue-chip company that may have to cut jobs at home. Unemployment benefits may become the biggest growth industry in the United States.
Such retaliatory measures are a form of reciprocity – one of President Trump’s favorite words – but not in a good way, writes Prof. Cooper. Canada is slapping 25 percent tariffs on U.S. produced steel and iron, the same penalty that the United States imposed on steel in late May. The U.S. is set to mandate an additional 25 percent tariff on 818 Chinese imports worth some $34 billion – a move that will only further inflame the situation and injure the trade relationship between the two largest economies in the world.
This kind of reciprocity ensures that all parties lose.
Read the full article here: https://www.businesstimes.com.sg/opinion/the-ugly-side-of-reciprocity-the-trade-war-with-the-united-states-partners-gets-hotter