China has threatened to retaliate on US tariffs. For now, Trump will hold off on the EU, but only if the EU cooperates.
The US, EU, and China are all sharpening trade swords. China’s Retaliation List Includes Boeing and Soybeans.
For now, Trump has backing off on the EU. The EU gets a temporary reprieve on Steel.
Apparently Trump does not want simultaneous trade wars on two fronts.
Belly Flop Reporting
Meanwhile, Wall Street Journal writer Greg Ip takes a massive belly flop off the high dive with his analysis China Started the Trade War, Not Trump.
“Unlike with steel and aluminum tariffs, economists see merit in Trump’s trade case against China” writes IP.
“China is undermining or taking away some of our rents, so we are relatively worse off and they are better off,” says Dartmouth College economist Douglas Irwin, author of “Clashing over Commerce: A History of U.S. Trade Policy.”
Taking China to the WTO might be a less dangerous approach. But he [Irwin] adds: “No one is saying we shouldn’t do anything.”
I expect better from Greg IP. He’s normally a good writer. Today, it is unclear what IP’s position even is.
This debate reminds me of a first-grader’s ploy, “Susie started it“, to which my mom would reply along the lines “If Susie jumped off a cliff would you follow?”
Did you catch the irony?
Irwin did not say the US was worse off. He said the US was “relatively worse off.”
Apparently we are all better off from free trade, but China is “relatively” better off.
We Must Destroy Free Trade To Have Free Trade
IP’s discussion reminds me of my post a couple days ago: We Must Destroy Free Trade To Have Free Trade.
Economist Daniel Lacalle inexplicably posted an article, Trump’s Tariffs are a Tool for Free Trade.
The concept is ludicrous, as explained.