Trading blows

Donald Trump campaigned as an unrepentant protectionist and, on the face of it, he has lived up to his word. He has torn up the US-Pacific free- trade partnership, threatened the European Union with trade wars and imposed tariffs on billions of dollars’ worth of imports from China. As you might expect, Beijing’s retaliation has been immediate — as has the damage. American cherry growers, for example, estimate that they have lost about $85 million after suffering retaliatory surcharges. Farmers are now having to be bailed out by the US government. Yet this week Trump has doubled down, introducing tariffs on another 6,000 Chinese imports. When China responds in kind, he says, America will move on to phase three.

Every time that trade wars are attempted, the results are the same. Protectionism might prop up industries which are uncompetitive in global markets, but any benefit is outweighed by costs imposed on, and jobs lost from, other industries. A businessman like Trump ought to know that — perhaps he doesn’t care because China-bashing is popular.

Or might there be method in the madness? A few months ago his former spokesman Anthony Scaramucci told this magazine that, for all the fire and fury, Trump’s objective is quite rational. Years ago, the US decided that goods and services could flow freely in from the developing world, but they accepted higher levels of tariffs on their exports. This was not free trade; it was uneven trade. For a long time, America accepted that imbalance because, as the pre-eminent nation, it could afford to do so. Now, however, China’s economy is the second largest in the world, yet it continues to protect itself through massive tariffs and subsidies. It ought not to enjoy the lopsided trade arrangement agreed when it was poor.