This Trade War Won’t Make America Great Again
It is already well known that commercial warfare involves the adoption by one or several countries of tariffs or barriers to trade with one or several third countries. Economists, as a rule, believe that this type of war is very unproductive, with a large negative influence on the social and economic welfare of the nations involved; However, political scientists consider the threat of a commercial war as an important aid in obtaining concessions of other types. Likewise, some economists argue that some economic protections are more expensive than others that could lead to a commercial war
Now, speaking of the trade war between China and the United States, it is known that it is a trade dispute that began in March 2018, after US President Donald Trump announced his intention to impose tariffs of 50 billion dollars on the United States. Chinese products under Article 301 of the Trade Act of 1974, arguing a history of “unfair trade practices” and intellectual property theft. Likewise, in retaliation, the government of the People’s Republic of China imposed tariffs on more than 128 US products, including soy in particular, one of the main exports of the United States to China.
Risks in economies
It is worth noting that the mercantilists maintain that the import duties of President Donald Trump are to reduce the trade deficit, protect US companies and boost exports to the rest of the world. Even so, the latest developments in international trade show that this is not going to be planned. In contrast, the president’s taxes are causing unintended consequences for several key industries, particularly agriculture and energy.
Likewise, since the conflict between the United States and China began, US soybean farmers have been decimated. Because Beijing was their biggest market for their crops, the Llanos have nowhere to sell their supplies. In this way, inventories have rotted, storage costs have increased, farms have gone bankrupt and farmers have begun to make the transition to other crops, such as cotton, wheat, and alfalfa.
It is necessary to indicate that for its part the federal government tried to rescue the agriculture industry by offering subsidies, granting ransoms and using the measures of the Depression era of the purchase of reserves.
Source: Andrew Moran | Mises Institute