Gordon G. Chang
Everyone is worried about a "trade war," and last week's U.S. presidential election has only heightened those fears. Donald Trump, the resounding winner in that contest, has threatened high across-the-board tariffs on all goods coming into the United States, and many fear a global downturn as a result. "If you have some very serious decoupling and broad scale use of tariffs, you could end up with a loss to world GDP of close to 7 percent," Gita Gopinath, the IMF's first deputy managing director, told the BBC last month. "These are very large numbers; 7 percent is basically losing the French and German economies," she added.
The concerns are real, but observers and analysts are identifying the wrong culprit, confusing the victim and the perpetrator. Don't blame Trump or America. Blame Xi Jinping and China.
Yes, Trump loves tariffs and tariff increases can cause global downturns. The former and future president has talked about them throughout his career and during the campaign, calling himself "Mr. Tariff" and "Tariff Man." "To me, the most beautiful word in the dictionary is 'tariff,'" he said at the Economic Club of Chicago in the middle of last month. "It's my favorite word. It needs a public relations firm."
Yes, that word could use some help. Economists abhor these measures, and global leaders do not like them either. Take Christine Lagarde, president of the European Central Bank and former IMF managing director. She sees parallels between today and the "economic nationalism" that led to a collapse in global trade and ultimately the Great Depression.
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