President Trump escalated his trade war with China in recent days.
In response to tariff increases Trump announced this month, China imposed a simultaneous tariff increase on U.S. agriculture and automotive products on Friday. Trump responded with a series of angry tweets, including the announcement of another series of tariff increases and a puzzling statement that “American companies are hereby ordered to immediately start looking for an alternative to China.”
The stock market tumbled as investors tried to imagine how much further this could go, and what in the world the president meant with his Twitter “order.”
Almost lost in the volleys back and forth across the Pacific Ocean, was this item: In response to a 3% tax France has ordered on the revenue of major multinational companies (Amazon, Facebook and Google, for example), Trump has threatened a tariff attack on French wine, which brought a weekend promise of tariff retaliation from the European Council president.
Here’s why we bring attention to that relatively small development: While Trump is taking on the world’s second largest economy in a high-stakes tariff war, he’s simultaneously antagonizing our long-term trade allies, none of whom have been brought to our aid in the bigger fight.
The U.S. has legitimate beefs against China’s trade practices, but we’re fighting unilaterally. Our long-term trade partners, who would stand to naturally benefit from any victories we win, are continuing to buy and sell with China. Thus, China develops closer relationships with the western world outside the U.S. while our workers, farmers and exporters take all the hits.
In France Sunday morning, Trump said he had had “second thoughts” about the China trade fight. Quickly, the White House clarified that he meant he only wished he had raised tariffs against China higher.
Trump’s tariffs are threatening to end the longest period of economic expansion in U.S. history and pull the world into a recession. With that much at risk, the president needs to have second thoughts about the wisdom of his unilateral trade war.
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