Is Europe Ready for a Trade War?
US President Donald Trump's long-awaited protectionist policies have finally arrived in the form of import tariffs that will impose higher costs on friends, like the European Union, than on adversaries such as China. And that outcome, however perverse, is fully in keeping with Trump's worldview.
PARIS – US President Donald Trump’s decision to impose import tariffs of 25% on steel and 10% on aluminum is surprising neither for its expression of protectionist ideology nor for its sheer economic irrationality. Rather, it is surprising because it has primarily targeted the European Union. Why is Trump taking measures against one of America’s main allies instead of its principal strategic adversary, China?
Trade has always been a highly politicized issue in the United States, which is the only country to have trade policy featured in the first article of its constitution. But the US is also unique in two other ways. First, Americans are much less dependent than others on world markets, owing to the sheer size of their own. That fact alone makes protectionism seem less risky.
Moreover, the relative weakness of the US welfare system makes the country more sensitive than Europe to the social consequences of job losses due to foreign competition. This helps to explain why former Secretary of Commerce Donald Evans once quipped that Americans are more likely to believe in Martians than in the benefits of free trade.