Make America 1929 Again


The Republican senator, Ben Sasse, put it best: “‘Make America Great Again’ shouldn’t be ‘Make America 1929 Again’.”

Most of the world, including the majority of America’s business community, see Donald Trump’s punitive trade actions in a similar light. They are searching for economic logic where none exists. His impulse is political. Though slapping tariffs on metals and car imports will lead to a net loss of American jobs, Mr Trump’s actions are meant for the “forgotten American”. They will feel noticed, even if it costs them dearly.

The biggest price tag is geopolitical. Mr Trump’s decision to impose the tariffs on national security grounds was simply a matter of convenience. The notorious section 232 of the Trade Expansion Act has only been used twice before — each time with some justification. Mr Trump is barely trying to make the national security case against European or Canadian metal imports. He chose 232 because the law gives the US president maximum leeway to do what he likes.

He is using the same law to justify impending punitive duties on foreign car imports. But what goes round may come round. Having broken a cardinal rule of transatlantic trade relations, Mr Trump will not be able to unbreak it. He is replacing a system of rules with political whim. The correct free trade answer would be for Europe to offer no response at all. But the European Union, which has a list of retaliatory targets, including Harley-Davidsons, Bourbon and jeans, is politically obliged to retaliate. Brussels will also take the US to the World Trade Organization’s disputes resolution court.

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Then there is China. Common sense would dictate that Mr Trump band together with its main trading partners and allies to pressure China to open up its “Made in China 2025” project to global investment rules. Other countries share US complaints about China’s forced technology transfer. But Mr Trump is alienating allies just as he could most use their help.

Failing that, Mr Trump could still have upheld the US rule of law, which had imposed crippling sanctions on ZTE, the Chinese telecoms company, for repeated violations of American sanctions law. Again, however, Mr Trump has spurned economic logic. After a call from Xi Jinping, Mr Trump let ZTE off with a light slap on the wrist. Were his aim to force China’s hand, this was the last thing he should have done. “He had China over a barrel on ZTE and he let it go,” said a European diplomat. “Either he did not know the leverage he had, or he did not care.”

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Launching a simultaneous trade war against America’s allies and adversaries conforms to no known international rules of logic. It will raise domestic prices, cut US jobs and reduce America’s global influence. Warning that Mr Trump’s actions could break the WTO will also fall on deaf ears. That may well be an outcome that Mr Trump desires. His chief trade negotiator, Robert Lighthizer, has long nursed a grievance against the global body. Mr Trump rails frequently against unelected American judges. He could doubtless win more retweets with a tirade against unelected foreign judges.

America’s trading partners are learning how to read Mr Trump the hard way. The US president is committed to the pursuit of a trade war of all against all. Drawing parallels to the 1930s, Emmanuel Macron, France’s president, warned this week of “modern-day sleepwalkers”. But that is a poor metaphor. Mr Trump knows exactly what he is doing. The fact that it poses a threat to the global order is a feature, not a bug, of his actions.



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