7 August 2019

Will Trump’s Trade Wars Reshape the Global Economy?

A trade war between the United States and China that began last year appeared to be inching toward a conclusion recently, but only after bringing the world to the brink of a global trade crisis and damaging producers—particularly U.S. farmers. Trump launched the trade war over China’s perceived unfair trade practices, including forced technology transfers and the theft of intellectual property. Now negotiations have once again stalled, and Trump has returned to the threat of raising tariffs on a broad range of Chinese imports to the U.S.

That may be particularly concerning to European officials who are set to start their own trade negotiations with the U.S. Trump has already decried what he sees as unfair trade deficits with European Union countries, particularly Germany, and he imposed tariffs on steel and aluminum imports from some allies, without seeming to understand that the EU negotiates trade terms as a bloc. A U.S.-Europe trade war could do lasting damage to both sides.

Chinese Vice Premier Liu He, right, with U.S. Treasury Secretary Steven Mnuchin, center, and U.S. Trade Representative Robert Lighthizer, left, in Beijing, May 1, 2019 (AP photo by Andy Wong).

Trump’s one clear-cut accomplishment on trade is the updated NAFTA deal known officially as the U.S.-Mexico-Canada Act, or USMCA. But it mainly recoups the self-inflicted losses from Trump’s withdrawal from the Trans-Pacific Partnership trade deal—only on a smaller North American, rather than trans-Pacific, scale. If that weren’t bad enough, the jury is still out on whether the deal will manage to survive ratification in the U.S.

It does not help that with the global economic trade system in flux, the body charged with overseeing it is in crisis, exacerbated by the Trump administration’s hostility to multilateral institutions of all stripes. Trump has accused the World Trade Organization of violating U.S. sovereignty, and his administration seems intent on hobbling it due to practices Trump perceives as unfair to the U.S. Though the WTO is clearly in need of reforms, Trump might opt to sink the body rather than try to fix it.

WPR covers the global economy in detail. This collection is an overview of our coverage of Trump's trade policy. We look at the latest developments and provide detailed analysis exploring key questions about what will happen next. What impact will Trump’s trade wars have on the upcoming U.S. election? What will they mean to America’s role in the global economy?

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