Trump’s trade war is bad, but how bad is up to the rest of us

Fortunately, the first signs are that most countries were too intelligent to give in to that temptation. They said that while they are ready to take “countermeasures”, they will begin by opening the negotiations to guarantee an agreement.

Trump is so crazy, there is always a chance that it is all he is looking for. “Give me something and I will put the big stick away.” In this case, the commercial war does not really go on. But it is risky to surrender to the bullies, which makes them want to return to another bite.

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If Trump asks too much in exchange for having dropped his new rate, former American friends and allies will be forced to insert with the countermeasures they have prepared. Since a tit-for-tat approach would be self-injurious, we can hope that these will have been carefully designed to hit the United States more hard than they damage their economies. This would minimize the repercussions from the commercial war.

At first glance, however, the main country that Trump is trying to punish, China, has not resisted the temptation to give the best possible. The new Trump rate on China is 34 % which, added to its existing duties, gives it a total tax of 65 %. China will hit all its imports from the United States with a rate of 34 %.

“Face” could be part of the problem here. China, now the largest economy in the world (when you allow the “equality of purchase power” because $ US1 acquires much more in China than the United States), it cannot fail to be able to react when it is affected by the second largest economy.

The trick is that America acquires a lot from China and China acquires a lot from America. It is when the two great boys really start to browse that the risk of recession in the United States becomes a risk of global recession. And, since China is our largest export market, it is there that the more indirect damage could affect us.

There is always the possibility that when quite American realize that, contrary to what he says on his baseball cap, Trump is making America again, he will be forced to cover the entire madness.

If we really have a commercial war that lasts more than a year, then there are two things to remember. First of all, if the other great economies, such as the European Union, Japan and Great Britain, do not join madness, most of the damage is limited to the United States and China while escaping it. However, we would be affected by a significant indirect loss of export income, but it could have been worse.

Secondly, the longer the two largest economies have continued their boxing match, the more the rest of the world would have started to deviate their trade away from the United States. And since the United States are attacking all other very high rates on some economies of Southeast Asia-but China is attacking only the United States, it is likely that most of the diversion will go in the general direction of China.

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Remember, the United States were the main pilot for a trans-transfixic partnership, with the aim of setting commercial rules in the edge of the Pacific and counteracting the growing economic influence of China. When, in his first incarnation, Trump retired from the proposal, the rest of us-trap which Japan, Canada, Australia, Chile, Peru, Mexico and several nations of the Southeast Asia-Hoic-hat, simply by renouncing it the global and progressive agreement for the trans-transfixic partnership.

And note, just before the announcement of Trump’s “Ruination Day”, the leaders of China, Japan and South Korea met and agreed to strengthen the commercial ties in response to whatever Trump announced.

If Trump’s tariff madness is not likely to kill the world economy, it will surely cause important changes to those who are trading with whom. And we will do much more trade with the countries of our region.

Ross Gittins is the editor of economics.

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