American businesses will at some point also start to feel the pain of trade wars
Add BT as a preferred sourceUS PRESIDENT Donald Trump once stated that "trade wars are good", and "easy to win". And it seems he believes that with the US economy growing faster than expected while its key trading partners are confronting economic problems, the United States is now in a stronger position to embrace a more aggressive protectionist strategy - and that it would be "easy to win" these trade wars.
It is true that with exports accounting for only 12 per cent of American gross domestic product (GDP), the United States would be less affected by the jolts produced by trade rows than, say, the European Union (EU) where exports constitute 37 per cent of the bloc's total GDP. Moreover, the American economy is expanding this year at the fastest pace in a decade, driven by rising domestic consumer spending, with some economists forecasting growth of close to 5 per cent by the end of 2018. This remarkable economic growth has been accelerated in response to the large tax cuts and spending bills approved by Congress and the Trump administration's steps to deregulate the economy, applauded by Corporate America and by a bullish stock market.
From that perspective, the Trump administration believes that it is in a position to "win" the trade wars that could be triggered by its decisions to slap 25 per cent tariffs on US$50 billion worth of Chinese goods and a similar levy on steel, and 10 per cent tariffs on aluminium imported from the EU and other economies, and its plan to raise the tariffs on European vehicle and vehicle-part imports. In response, China has announced a retaliatory 25 per cent tariff on US$50 billion worth of US products while the EU reciprocated with tariffs on US$3.2 billion of American goods.
