Four Days to Trade Wars: Can Stupidity Be Avoided? by Mike “Mish” Shedlock

Trade wars prevent trades that parties deem in their best interests, substituting governments’ view for their own. Interestingly, many of those clamoring for trade restrictions also want to get the government off their backs. You can’t have it both ways. From Mike “Mish” Shedlock at

US steel and aluminum tariffs start Friday. Germany’s economy minister is in D.C. But Trump has stringent demands.

No one wins trade wars. The notion is ludicrous. I have more on the “meaning of win” in a moment. But first let’s consider the Eurointelligence view.

This is not a trade war the EU can ever win, as Wolfgang Munchau points out in his FT column. If the EU were to put up a big fight over this, with a long list of sanctions on Friday, the US would immediately respond with a tariff on car imports. It would be the equivalent of the Fool’s Mate in chess, Munchau argues. Donald Trump is right in his assertion that trade wars are easy to win – if your opponent is sufficiently desperate and addicted to the export of manufactured goods, like Germany is. When we said that a current account surplus of 8% (or probably higher) is not sustainable, it was not meant as a statement of right or wrong. Unsustainable means that it will end at some point – through either adjustment or force.

Spiegel magazine had a story over the weekend that there is a glimmer of hope. It was one of those short Spiegel news stories, something they picked up from a single source, but not quite worthy of a full-length article. The story says the US will make three specific demands as a pre-condition for exempting the EU from the steel and aluminium tariffs. The first is that the EU caps steel output at 2017 levels. The story did not reveal the metric, whether in volume or value. The second is that the EU take anti-dumping measures against China, and agrees to cooperate with the US in questions of international trade policy. And, to top it all, the Europeans will have to deliver proof that they are on the way to meeting their Nato commitments on defence spending. The latter is an impossible demand to meet since no such proof can exist. The German grand coalition, for example, is making no efforts to increase defence spending. The priority of the new finance minister, Olaf Scholz, is to maintain the fiscal surplus.


One response to “Four Days to Trade Wars: Can Stupidity Be Avoided? by Mike “Mish” Shedlock

  1. If Americans were aware of the tariff barriers American goods face overseas and the theft of intellectual property rights by Canada, the EEU, Russia, and China, they wouldn’t agree to trade barriers, they’s make them mandatory.

    I do hate these cretins and their endless trade war talks. Are they referring to the great candle debacle; the bloody cheese war, or perhaps the Disney blitzkrieg? People don’t understand that China export via Mexico and Canada to avoid American tariffs and thereby circumvents fair trade. Canada has close to zero steel capacity, which is fine for a country that can depend on the USA. Nor does Mexico. But hey why not be 80% dependent on China.

    And let us ignore the theft of American trade secrets on an industrial scale by China. That’s okay with the elites, its the working stiff that will lose his job, not the grandees on K street.


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