This letter appeared in The Economist on June 30th, 2018
Your recommendation of retaliatory tariffs against America is the perfect prescription for ensuring a destructive trade war (“Rules of war”, June 9th). You strongly defended the status quo in global trade rules. Although America’s steel and aluminium tariffs are, at best, dubious on their merits and represent a threat to the trading system, there is a reasonable chance that they could withstand a legal challenge. Unilateral retaliatory tariffs are, on the other hand, clearly prohibited under the rules of the World Trade Organisation and would never withstand legal challenges. Your support for illegal retaliation under the pretence of preserving a rule-based order is bizarre. The reality is that such retaliation is driven by local political imperatives and for preserving trade surpluses, not by a faux respect for the rules.
Anyone who believes that retaliatory tariffs have the slightest chance of stopping American policy in its tracks is living in some fantasy world. The reality is that the post-war world order that was steered by a hegemonic United States is no longer fit for purpose in a 21st-century world where trade issues are much more complex and are coalescing around three competing blocs led by America, China and the European Union. In such a world, competition is more likely than co-operation. If an all-out trade war is to be avoided, we must rethink the basis of our global trading system rather than sticking doggedly to an unsustainable status quo.
Europe and Canada should tread with caution. Should a fierce trade war break out, they stand to lose much more than anyone else and risk being squeezed between America and China. A severe transatlantic rift would also jeopardise the future of a European project that is still heavily dependent on America’s security umbrella.