Reich writes: "Trump this morning: '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!'"
Former Clinton labor secretary Robert Reich. (photo: Steve Russell/Toronto Star)
It Was a Trade War That Helped Cause the Great Depression
03 March 18
rump this morning: “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!”
People, this is totally bonkers. Trade wars are lose-lose propositions. The Smoot-Hawley Tariff of 1930 (see below) resulted in a trade war that helped plunge the world into the Great Depression.
And Trump’s “easy to win” remedy of ending trade with countries that run trade deficits with us can’t possibly result in a big win for us, because American consumers would end up paying far more.
Someone should also remind Trump that trade deficits aren’t necessarily bad even if foreigners end up holding lots of dollars, since we’re the ones who create dollars in the first place.
China raises a special set of problems, but those problems won’t be rectified by starting a trade war with a nation on which so much of our exports, especially agricultural products, depend.
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