If you’re like me, you used to think trade wars belonged in the dustbin of history that you learned about in high school and then forgot — something having to do with Hawley-Smoot, or Smoot-Hawley.
If you’re like me, you used to think trade wars belonged in the dustbin of history that you learned about in high school and then forgot — something having to do with Hawley-Smoot, or Smoot-Hawley. Whatever.
We don’t fight trade wars anymore, I thought. Instead, we make trade deals to keep goods flowing around the world.
Boy, was I ever wrong. Apparently, we’ve been doing trade wrong for years. That’s what the president of the United States says, and if you can’t trust the president, then what’s your problem?
He’s been talking up trade wars enthusiastically lately, tweeting about how the United States is “losing many billions of dollars on trade with virtually every country it does business with,” which isn’t actually true, but you have to admire the boldness. And, he tells us, “trade wars are good, and easy to win.”
The president imposed stiff tariffs on aluminum and steel imports. China fought back with tariffs as high as 25 percent on 128 products from the United States, including pork, wine and seamless steel pipes, and followed up with even more proposed tariffs on $50 billion in goods that included exports like soybeans and cars.
Which will make it harder on our farmers and manufacturers and steel producers to sell their products, while making China’s imports more expensive for us consumers. From there, things have gotten much more confusing.
See? Fun! Who doesn’t like wars that are good and easy to win? I want in on the fun! Therefore, my fellow Americans, I am boldly declaring my own war.
After all, I seem to have a deficit with every one of my trading partners. And don’t get me started on Apple. I spend and spend, and does it send me any money in return? It does not. It’s abusive!
For instructions in how to conduct my personal war, I turned, once again, to the commander in chief. “Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore — we win big. It’s easy!”
OK, then! It turns out that the trade deficit with Mexico is actually more like $63 billion, but what’s a 59 percent error among friends?
Like the president, I did not have the honor of serving in our armed forces. No problem. This might be my chance to put on a uniform, maybe one with lots of shiny medals and ribbons to commemorate the seamless steel pipe skirmishes I’ve been involved in. Or maybe I could do what the young people do — some kind of cosplay that lets me suit up as a Viking, or a “Star Wars” stormtrooper, or even the rampaging DC Comics character Harley Quinn, girding my loins for economic battle.
The problem was that I don’t know enough about economics to understand what exactly I’m supposed to do. My mind must be insufficiently deep to understand these issues, I decided. And so I called a couple of experts, actual economists.
I called Douglas Holtz-Eakin, a conservative economist who served in the George W. Bush administration. He told me that my personal trade deficit is not as bad as I think it is. “I have a tens-of-thousands-of-dollars trade deficit with P.F. Chang’s every year, but I’m a very happy loser,” he said.
The problem with trying to engage in a personal trade war, he explained, is that individuals don’t often produce things that are easy to put a value on and barter.
“I give lectures in economics,” he said, so “I need to find those suckers who are willing to take them so I can eat.” As for me, he said, I have only one product — basically, paragraphs. “You’re in worse shape than I am! You should be afraid,” he said.
Then the conversation began to get uncomfortable. He said that if I were to try to impose a tariff, this interview we were conducting would cost him money because — bear with me — he would essentially be importing me. I liked that part, until he added that if I went down that route, there would be consequences: “It’ll be the last interview I ever do,” he said.
That, he said, is the lesson of trade wars: “Trade stops, and things that used to benefit both of us go away.”
That sounds like the opposite of good and easy to win.
I decided to check in with an economist from the Democratic side of the aisle, Austan Goolsbee, who was chairman of the Council of Economic Advisers in the Obama administration. I told him about my idea.
“It’s a crazy idea,” he said, helpfully. “It doesn’t make sense to say, ‘I’m going to declare a trade war on the grocery store, and I’m going to be better off.’ The thing that you’ve forgotten is that you get a lot of food there.”
It was as Holtz-Eakin had told me: While businesspeople often see the world in terms of winners and losers, trade policy is about trying to find ways to let a swelling economic tide raise all boats.
“Trade deals are about setting the ground rules so other people can get what they want,” Goolsbee said. When you stop them all from getting what they want, he said, you’ve “got the game wrong.”
I had to admit that the two economists had a point. I may feel that Whole Foods has, in fact, gotten “cute” by charging so much for wild-caught gulf shrimp and those really amazing rotisserie chickens. But if I don’t trade with Whole Foods any more, will that really let me “win big”?
I really like those shrimp on the grill; they’re my big weekend splurge. And if I stop spending money in grocery stores altogether, well, what will I eat?
Goolsbee said I was getting the idea: “Building walls to trade, that doesn’t make you rich. That makes you poor.” And, apparently, shrimpless.
Zero sum — the idea that there have to be winners and losers — “is fundamentally the wrong way to think about trade and doesn’t make any sense,” he said. Goolsbee added that, “sadly, it seems that the White House is espousing exactly that view.”
So he’s saying that I’m crazy, and I’m wrong, but I’m not alone. Which is comforting, but still not great.
My trade war might have to wait. Which is really too bad, because I’ve already bought the Harley Quinn outfit.
This article originally appeared in The New York Times.