A Protracted Trade War? Not Necessarily

President Trump aims to significantly reduce bilateral U.S. trade deficits with the E.U., Asia, Mexico, and Canada principally through reducing tariffs on U.S. exports.  To achieve this, he is prepared to impose a series of retaliatory tariff increases on imports to the U.S. to pressure trade partners to cooperate.  In particular, his trade policy targets the excess trade advantage that past agreements ceded to U.S. trade partners beyond what free trade would warrant based principally on competitive advantage.  This injustice is like finding out one's phone bill was overcharged for forty years and now an adjustment is demanded, at least prospectively.  That U.S. autos exported to Germany are subject to a tariff that is four times what Germany incurs on its auto exports to the U.S. is an example of the inequity Trump challenges.  What's more, some U.S. trade partners, especially China, are significantly subsidized by...(Read Full Article)