Earlier theories advocate for the open economy to close the gap in trade deficit and embrace globalization. Recently, many advocates of globalization are now building blocks against trade. what went wrong in our earlier assertion that trade can reduce poverty and capital flow can stimulate investment.
It is completely true
and as a prove is Huawei Technologies Co.
https://en.m.wikipedia.org/wiki/Huawei
trade wars can be easily won, but the consequence could be to loose the next election. Often people are those who suffer most from trade wars, and they might reflect whom to vote for next time.
Paul: In a short version, the world went from closed trade to open trade since the Great Depression. However, the recent trend is regional trade agreements.
However, regional trade agreements require all countries to benefit. A country won't sign a trade agreement unless they perceive benefits greater than costs.
Dear all,
trade wars are NOT easily won. That may be true when Trump attacks a weak country such as Mexico, but I doubt that the US can win against China or the EU easily...
Trade wars result in lose-lose situations that are not helpful in World Trade...
I think it's a very extreme competition. I think cooperation would be more beneficial for mankind
Free trade enhances competition and increased quality of goods and services. However this does not look good in Trumps administration
Every victory comes with a price:
https://en.wikipedia.org/wiki/Pyrrhic_victory
National protectionism can result in an economic gain , e.g. job creation,
but you will also lose stakes in the evolving global agenda:
https://en.wikipedia.org/wiki/Protection_or_Free_Trade
The Soviet Empire was protected against the developing capitalist world market and only its collapse demonstrated the accumulated economic deficits, in terms of innovation, entrepreneurship and economic liberty. A trade conflict or war is not good and easy to win, it depends on ahighly sophisticated, intelligent and prudent meta-analysis of your strategic comparative advantage in the global arena of economic gladiators. Old Roman wisdom teaches: even the greatest gladiator can be defeated by fatigue.
A war of any type can be easy to win if you have overwhelming advantages and use them well. In the case of the US, having the large size and great diversity of the US economy as well as the advantage of the dominant role of the dollar in international exchange--trade or financial, it might seem that using those advantages to force concessions from others (such as China) could be easy. Please note however that the usual effect of a war is that both sides lose, and only sometimes does even one side gain--and even then the gains are likely to be smaller than the losses to the other side.
In the case of the US vs China the US may gain concessions in the short term, but give China a greater motivation to improve its position and go for another round in the longer run. Now China seems rather dependent on the US for chip technology for example, and a threat to cut off supplies of advanced chips makes a (forgive the expression) good bargaining chip. In the long run it gives China reason to invest more in chip development, eliminate its dependence on this key technology. If it succeeds concessions once made can be pulled back, thus winning one war can lead to losing the next.
The real trouble with the expression though is that is mistakes trade for conflict with all trade involving losses on one side and gains on the other, while trade should be seen as a way to make gains for all sides. Negotiations should be over the size and distribution of gains, and that is not war at all.
Trade should be seen as a way to make winnings for all parties. EQUIVALENT CHANGE
I think trade wars are good in economic sense. However, as to if they are easy to win depends on a number of factors which are relative and vary from one place to another or from one sector to another
Naushad Khan
Dear all,
most of your oberservations above regarding smaller and weaker economies in world trade are correct.
However your post on the benefits of Trade Wars describes the functions of duties in general: generating income and revenue for states and protecting the domestic production and industries...
Your post:
"In Trade war the country increase the tax duty of the imported goods which increase the price of the that imported good which disturb the consumer surplus of the population which latter on use the votes against the present government. The trade war major objective is that to protect the industries of the country and increase the government revenue of the country and make the budget surplus while which negatively affect the consumer surplus which latter on affect the present government election negatively".
Regarding trade wars: Counterveilling duties are put on top of normal duties - that generates more income and revenue for states but damages all traders and customers concerned...
Whichever country starts - the opposing country will react with putting up more counterveilling duties - clearly a loose-loose-situation...
Dear all,
Trade war is the biggest threat to global peace, stability and prosperity today.
C Ionescu
In either case, trade liberalism or protectionism, there are always winners and losers. The government takes the policy which maximizes utility which is usually in favor of the majority of the population. when a country embarks on a trade liberalization plan, some people get hurt. The government takes this policy believing that there are more people who enjoy the benefits. In case of protectionism, it is vise versa. Unfortunately, in both cases, the government does not do anything, or does not do enough, to assist these unfortunate people. In most cases, the government lets the invisible hand deals with these people's fate.
@ Cornel and Yudhi: why are we really at war on trade when we earlier claimed that global trade has the potential to close the gap in our balance of payment enhance employment opportunities, and impact positively. Contrariwise, it is increasingly clear that trade protection can help countries to protect infant industries and trigger growth. At the heart of technology innovation, the WWW Rostow theoretical conjecture payoff as smaller nations are performing better than the big one. Obviously, with fear of losing the powers. The so-called founders of IMF, World Banks made a reverse move to fence border which was earlier forbidden in the Bretton Wood System. Expectedly, the Trade War economists failed to provide an explanation for this new event. with the exception of Paragarinya who spent his entire career providing an explanation to the misery on trade. Models of international trade have traditionally used richness on the supply side to gain insight into why countries trade and the likely implications of integration. To date, all efforts to gain insight into the consequences of this variation have started by relaxing concepts of the trade union. In tradable goods industries, it is typical for firms to earn their highest market shares in their domestic market. This home market advantage persists despite substantial integration of international markets over the past several decades. There is no shortage of explanations of, friction in the market, technology breakthrough, degree of investment, trade cost, preference changes and heterogeneity for varied product characteristics. Interestingly, the WTO failed to compel or settle the event that led to the trade war. This is because of the insincerity in the establishment of the organization along with the sharing ratio of trade gain bias their composition. More worrisomely, the population disadvantage nations with different diversification strategies exploit the knowledge of production by sponsoring students and enhancing long term development plan to overturn event. The one-billion-dollar question still remains: Trade wars are good and easy to win: How true is this assertion?
Dear all, I think we have answered thoughful and adequate - trade wars are not good for the economy and are currently posing the biggest threat to peace, stability And growth on a global scale...
Thank you for your assumption. But looking at from our earlier knowledge of trade. Carsten, do we debunk our earlier theories on trade?
Regarding the assumption posed twice here:
"Contrariwise, it is increasingly clear that trade protection can help countries to protect infant industries and trigger growth." Agreed and proven.
But that is the normal use of duties!
Here we are debating trade wars and high counterveilling duties!
But let me be crystal clear here: Which industries does US president Trump to develep - the domestic steel industrie (died long ago) the domestig car industry (diet mostly long ago) - the film industry (no duties required) - the music industry (no duties required) - the textile manufacturers (long ago moved on to producing in other countries). No, trade wars cannot protect the domestic market but lead to a global crisis, nationalism and possibly even war...
A well known wisdom is as long there is trade between nations there is a common interest and no conflict... But with autarkie and nationalism that equatations stumbles into disbalances and breakes down - a fight over resources begins...
How does Trump want to create new jobs for his white poor voters? Police officers to shoot down Blacks or colored offenders or protesters Or Gay female World soccer champions? Or more possilby he may employ some nerds for his twitter postings on his own expense???
But I fear he will use tax money for his payments...
Hi, Olatunji A Shobande. This is actually an interesting discussion. The advocates of free trade always show off the benefits which include economies of scale, larger market, larger employment and industrial efficiency. Nonetheless, they usually fail to mention that this benefits will only enjoyed by sectors which have comparative advantages. They rarely mention the fate of those who are burdened by comparative disadvantage. It is undeniable that free trade does not benefit everyone. It is indeed a policy taken based on utilitarianism. Regrettably, there are winners and losers. Is trade war good? Yes, it is good only for those who experience misfortune during the free trade regime. Is trade war easy to win? I am not so sure about winning the war. Yet, at least it is easy enough to win the vote from the opponents of free trade.
@James E. Larsen, your expertize is in Housing!
Pray, explain your theory and give evidence here...
I wouldn’t say much because trade wars are helpful to some countries to the extend of establishing a fairplay trade between both the exporters and the importers. For instance the trade war between China and US is seen to be good to the US to establish a good trade practice with China . China always play smart by imposing strict policies and higher import duties on imported goods into their country but want other countries to easily open their doors to them . The WTO should sit up if only we want free and fair trade between countries . The bottom line depends on the WTO to act according to its rules and regulations governing trade.
Thank you for this question. Trade wars mean successive retaliatory measures, meaning higher tariffs, therefore higher prices for end consumers. If this become the norm (higher duties) then trade wars are not good at all. If through the threat of higher tariffs both sides come to an agreement, then trade wars are good. Both actual US-China and US-EU trade wars have not brought anything good until now (in my opinion at least) and past trade wars were accompanied by mixed results. Conclusion: it is better to negotiate before starting a trade war!
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