Paul Krugman: Trump Is About to Launch His First Major War, and It’s as Ill-Conceived as You’d Imagine

Jul 3, 2017 by

News & Politics

He’s convinced threatening our allies is the best way to achieve a win.

Photo Credit: YouTube Screengrab

Our president is obsessed with the idea that he’s being taken advantage of. On the campaign trail, he railed against immigrants who were supposedly stealing America’s jobs and draining its social services. He spent the European leg of his first foreign trip whining about how other NATO members don’t pay their dues. He also loves war (remember when he asked for a military parade as part of his inauguration?).

Now, as Paul Krugman writes in his Monday column, he’s combining these interests in a dangerous new scheme: a trade war.

Krugman is referring to a report from the news site Axios that suggests Trump is determined to impose “punitive tariffs on imports of steel and possibly other products, despite opposition from most of his cabinet.” Why? According to Axios, it’s because Trump’s base “likes the idea of a trade war” and “will love the fight.”

This, as Krugman (and frankly, most of humanity would agree), is a terrible way to make policy. If Trump thought health care was complicated, he’s in for a rude awakening with trade. First of all, Trump’s attempts at protectionism will backfire: “A tariff on steel helps steel producers, but it hurts downstream steel consumers like the auto industry. So even the direct impact of protectionism on jobs is unclear.”

Then there are the impacts on jobs: “any job gains in an industry protected by tariffs must be compared with job losses elsewhere. Normally, in fact, trade and trade policy have little if any effect on total employment.” Krugman explains:

“Suppose that Trump were to impose tariffs on a wide range of goods—say, the 10 percent across-the-board tariff that was floated before he took office. This would directly benefit industries that compete with imports, but that’s not the end of the story. Suppose that Trump were to impose tariffs on a wide range of goods—say, the 10 percent across-the-board tariff that was floated before he took office. This would directly benefit industries that compete with imports, but that’s not the end of the story.”

Trump is not exactly a details man, so perhaps unintended consequences are beyond the scope of his attention span. In that case, he should consider other countries’ response, like say, revenge, a concept more in line with his interests. Our trade partners would certainly retaliate, and as Krugman points out, it’s not certain America would win.

“For one thing, we are far from being a dominant superpower in world trade,” he writes. “The European Union is just as big a player, and capable of effective retaliation (as the Bush administration learned when it put tariffs on steel back in 2002). Anyway, trade isn’t about winning and losing: it generally makes both sides of the deal richer, and a trade war usually hurts all the countries involved.”

Krugman isn’t arguing for pure free trade or trying to say that globalization is always good (he notes that “globalization has hurt some American workers, and an import surge after 2000 disrupted industries and communities”). What he does argue is that it already happened, and created a series of complicated relationships and transactions. Plus, all those tariffs that Trump loves so much are only going to benefit industries with relatively few workers.

Unfortunately, Trump might still go through with it. As Krugman reminds us, he campaigned as a populist, and stuffing his cabinet with Goldman Sachs castoffs isn’t exactly keeping his promises. But calling for a trade war, “sounds more like the guy they thought they were voting for.”

Of course, this is Trump. He’s both incompetent and malicious. Krugman concludes: “In this area, as in, well, everything, he has no idea what he’s talking about. And his ignorance-based policy won’t end well.”

Read the entire column.

Ilana Novick is an AlterNet contributing writer and production editor.

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