Trade wars have no winners as US ramps up protectionist stance

A lecturer at a prestigious UK university has commented on the possible trade war between the US, China and the EU following President Donald Trump’s statement last week of “winning” on trade.
Dr Fragkiskos Filippaios, a Reader in International Business in the Kent Business School at the University of Kent, says, “The last 60 years we have seen a significant move towards trade liberalisation both in merchandise goods as well as services. With the General Agreement on Tariffs and Trade immediately after the Second World War, countries indicated their willingness to work together in order to remove barriers to trade and enhance global efficiencies that will generate benefits for all. This was further reinforced with the founding of World Trade Organisation in 1995, an organisation that would further facilitate free trade but also act as dispute settlement arbitrator. A number of free trade agreements have also been signed over the same period of time with the European Union moving forward with the creation of the Single Market and Canada, Mexico and US signing the North America Free Trade Agreement.”
Dr Filippaios continues, “Whilst protectionist governments have always made efforts to re-introduce barriers to free trade in the past, such as the steel tariff imposed by the Bush administration back in 2002, these disputes were always addressed through the Dispute Settlement Body of WTO. In fact, the US had to remove those tariffs as WTO’s verdict was that these were not imposed during a period of import surge. Thus far, trade disputes have always been addressed through WTO’s arbitration and countries have accepted the organisation’s verdict. It is the first time in the last few years where major trade partners, such as US and EU, consider direct retaliation moves to each other’s barriers to trade.”
The lecturer concludes, “Moving away from WTO dispute settlement means that retaliation can easily escalate and we might find ourselves in the middle of a trade war between the two most important trade regions in the world with possible implications for other countries. A tit for tat approach means that consumers and industries in both regions will lose simply by paying higher prices for final and intermediate goods. Higher prices that will not necessarily lead to the creation of more jobs as the Trump administration is arguing. In any case, the last time import tariffs were imposed on steel from the US, the actual effect for the US economy was a negative one.”
Established in 1965, the University of Kent – the UK’s European university – now has almost 20,000 students across campuses or study centres at Canterbury, Medway, Tonbridge, Brussels, Paris, Athens and Rome. In June last year, it was awarded a gold rating, the highest in the UK Government’s Teaching Excellence Framework (TEF).
In the Times Higher Education (THE) World University Rankings 2015-16, it is in the top 10% of the world’s leading universities for international outlook and 66th in its table of the most international universities in the world.