Perspective: Trump’s trade war is an intellectual disaster
President Trump speaks to reporters during a meeting with China's Vice Premier Liu He in the Oval Office of the White House, April 4. By Matt O'Brien Matt O'Brien Reporter covering economic affairs Email Bio Follow Reporter May 9 at 12:38 PM President Trump thinks trade wars are “good and easy to win,” mostly, it seems, because he doesn’t understand anything about them.
The result is that Trump doesn’t think we have much to lose from blowing up the global trading system, since, according to his extremely incorrect theory, that system is already making us lose hundreds of billions of dollars a year. It’s an optimism, in other words, born of ignorance. Which is why it almost goes without saying that the reality of a trade war would be much more pessimistic. There are two things to keep in mind here.
Trump isn’t worried about any of this, though, because he doesn’t understand how tariffs work either. In his mind, you see, they’re almost a form of tribute that other countries are forced to pay us. This, unlike his other ideas, at least has the virtue of being possibly true. But it just so happens that we know it’s not, this time around. How is that? Well, it all comes down to whether China, in this case, would rather try to maintain its market share or its profit margins.
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