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Major US trading partners have condemned President Donald Trump's decision to impose the punitive tariffs as protectionism and an affront to allies. Photo: AFP / Carlos Barria
Major U.S. trading partners have condemned President Donald Trump's decision to impose the punitive tariffs as protectionism and an affront to allies. Photo: AFP / Carlos Barria

On the verge of a trade war, the last presidential tantrum

Just days before the NATO meeting, presidential impulsivity puts the country on the verge of a real trade war with its economic allies.

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Whether in immigration, security or economics, the U.S. president insists on fighting windmills.

His latest pitched battle has been the "retaliation" against his economic allies for what he has called "unfair treatment" to the United States when it comes to trade.

Since March, Donald Trump's administration has imposed tariffs on imports of steel and aluminum, dealing a blow to its relations with countries such as Canada, those in the European Union, and China, a circumstance that has escalated to an exchange of threats as a prelude to what many foresee as an assured commercial war.

In an interview with CNBC, one of the founders of Hamilton Place Strategies, Tony Fratto, said that the picture is clear: "We are definitely in a trade war. I don’t know how else you can call it. We have countries slapping tariffs on each other. We are slapping them in a whole range of companies and sectors of the economy; other countries are doing it to us and are anticipating more (moves), and I think it’s going to get worse before it gets better."

For specialists, this is not a normal circumstance in trade discussions.

The United States, as the founder of the post-World War II world economy, was part of the voices that established the World Trade Organization (WTO), always allowing "some kind of flexibility," such as the temporary tariffs imposed by Barack Obama on Chinese tires in 2009, as Paul Krugman recalled in the Washington Post.

The difference with Trump’s strategy is that "the motivations behind his tariffs are something new" that breaks with the diplomatic tradition or "the rules of the game" created under the U.S. signature.

Under threats of retiring from the WTO, Trump "wants to work unilaterally on trade, he doesn’t like the fact that we are subject to the WTO," said Ben White, an economics specialist for Politico.

Although countries like China have managed to "circumvent" the WTO rules in some way, it has always been in accordance with the commercial language imposed by international diplomatic agreements. Trump’s aggressiveness now aims to break with the schemes that have maintained global economic stability in one way or another.

"There is no doubt that we could improve the WTO, but to say that the United States is a 'loser' in a world led by this organization is simply inaccurate," Fratto added. "We created the WTO as the dominant economy to serve our interests, make no mistake about this. We have created a world after the Second World War that is beneficial for the United States, where the world's reserve currency is the dollar and a trading system that benefits us."

However, President Trump's criticism of the way in which the WTO is currently handled is not entirely wrong. According to White, "China does abuse us in terms of technological intellectual property, but while (Trump) can diagnose the problem, he comes up with solutions that are not going to be particularly helpful."

For J.P. Morgan’s John Normand, "a full-fledged trade war would open a hole in global economic growth due to the reduction in trade volume, interruptions in the supply chain and loss of confidence."

Despite the warnings, the president is serious about his threats, something that for many was just a negotiation strategy, but the response of the international community - the imposition of tariffs by Canada, Mexico, and China, as well as the widespread rejection in Europe - seems to indicate that the commercial war is now a reality.

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