Trade war and the eruption of economic nationalism
22 June 2018
One year ago, there was a conflict in major international economic bodies over the refusal of the United States to include a commitment to “resist protectionism” in communiqués and statements.
The phrase had been regularly invoked by international organisations such as the International Monetary Fund and the G20 in response to the eruption of the global financial crisis in 2008. Indeed, the leaders of the major capitalist powers regularly congratulated themselves over the following years that, in response to the most significant economic breakdown since the Great Depression, they were not going down the path of the 1930s.
The lessons of history had been learned, they claimed, and there would be no repeat of the trade war and other protectionist measures that played a key role both in deepening the Depression and creating the conditions for the eruption of World War II.
Twelve months after the outbreak of the war of words, what is the situation?
The United States, invoking “national security,” has imposed tariffs of up to 25 percent on steel and aluminium imports from the European Union, Canada, and Japan. The EU will today impose retaliatory tariffs, and Canada is likewise preparing to impose tariffs on the United States.
Next month the US will start to impose tariffs on $50 billion worth of Chinese goods, directed at high-tech products, with threats to impose imposts on a further $200 billion worth of Chinese goods, and the possibility of tariffs on an additional $200 billion after that if China goes ahead with its threat to retaliate.
The key issue in the conflict with China is not primarily the US trade deficit—the US has rejected moves by China to increase its imports from America—but the moves…