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World leaders including Vladimir Putin and Xi Jinping have warned Trump that his protectionist policy is a lose-lose for the world [PPIO]
Some 1,100 economists wrote an open letter to US President Donald Trump urging him not to repeat the mistake of the protectionist Smoot-Hawley Tariff Act of 1930, which led to higher prices in US markets and led to a decline in living standards domestically.
“Today, Americans face a host of new protectionist activity, including threats to withdraw from trade agreements, misguided calls for new tariffs in response to trade imbalances, and the imposition of tariffs on washing machines, solar components, and even steel and aluminum used by U.S. manufacturers,” the letter said.
The letter also quoted a similar document authored by more than 1,000 experts sent to US Congress in 1930.
Congress did not take economists’ advice in 1930, and Americans across the country paid the price. The undersigned economists and teachers of economics strongly urge you not to repeat that mistake. Much has changed since 1930 – for example, trade is now significantly more important to our economy – but the fundamental economic principles as explained at the time have not.
Global economies criticized Trump when he announced in March 2018 that he would impose a 25 per cent tariff on imported steel and other imported items.
Prominent trade organizations and American allies lashed out at Trump saying that he is igniting a trade war.
But Trump says that the US is losing billions in doing business with other countries, and welcomed a trade war, which he said his country would win.
But a trade war is in no one’s interests, says World Trade Organization Director-General Roberto Azevedo.
“The WTO is clearly concerned at the announcement of US plans for tariffs on steel and aluminum,” he said.
“The potential for escalation is real, as we have seen from the initial responses of others.”
China has vowed to respond in scope and intensity to the threat of US tariffs, accusing Washington of protectionism that threatens the functions of the World Trade Organization and the international trade system.
But on Thursday, senior US officials including Trade Representative Robert Lighthizer, arrived in Beijing for crucial talks over tariffs.
On Friday, the Chinese news agency Xinhua said the two countries reached agreements on some issues in their economic and trade consultations in Beijing.
China and the US had been locked in a war of words and threats over US President Donald Trump’s decision to impose substantial tariffs on Chinese goods entering US markets. China has responded by doing the same, largely focused on agricultural industries in the American heartland.
Trump responded by increasing the scope of Chinese products to be hit with tariffs – to $150 billion – in a tit-for-tat exchange between the two economic powers.
The BRICS Post with inputs from Agencies
