US-China trade war: Opinion Home Opinion All stories From trade war to third world war? From Korea to the South China Sea, Trump’s tariffs risk escalation


Go one step beyond that, and countries are going to begin blockading shipping and closing borders entirely. Finally, there is the danger of war as the only recourse that some leaders will decide is needed to set matters straight again.

Think of Chinese support for North Korea: Pyongyang relies on Beijing for virtually all its oil and a large percentage of its food, among many other items. If the US fails in its dialogue with North Korea over denuclearisation and the danger of war again hovers over the Korean peninsula, China would surely side with North Korea, as it did in the Korean war.

The stand-off with China extends all round the rim of Asia, down to the South China Sea and on to the Indian Ocean and the Arabian Sea, and beyond.

Korea’s trade surplus with the US last year was US$23.1 billion, down from a high of US$28.3 billion in 2015 but still considerably more than US trade officials would like.

Japan, whose surplus with the US last year reached US$68.8 billion, down from a peak of US$76.4 billion in 2012 but still far too high.

With numbers like these, it’s easy to see why Trump is talking so tough about the trade deficit while America’s trading partners are outraged by moves to cut it.

The fear, however, is that these nasty battles could eventually explode into armed conflict in which hundreds of millions, maybe billions, would perish. Policymakers and negotiators have to keep this risk at the top of their concerns as they confront one another in a global trade war that could someday erupt into the third world war.


Macroeconomics – 9. International Trade and Protectionism

  1. Explain the theory of absolute advantage.
  2. Explain the theory of comparative advantage.
  3. What is the difference between a tariff and a quota?
  4. Illustrate the deadweight loss of a tariff versus a quota.
  5. Why, from a political perspective, are quotas often preferred to tariffs?
  6. Briefly summarize the six major arguments in support of protectionism.
  7. When does dumping occur?
  8. Provide several examples of non-tariff barriers to trade.
  9. What is the GATT?
  10. What is NAFTA?
  11. Describe the European Union.

Peter Navarro – Director of Trade and Industrial Policy The guy running Trump’s trade policy just wrote a seriously troubling op-ed in The Wall Street Journal

2 MOOCs on Coursera which he is teaching The Power of Microeconomics: Economic Principles in the Real World
The Power of Macroeconomics: Economic Principles in the Real World

Time is now 2018/06/21, and China and US is on the brink of a trade war.

Quote from the article, dated 2017/03/06:

Peter Navarro writes like a man ready to start a trade war.

Navarro’s views expressed in the article shouldn’t surprise many who’ve been following his career. The Economist called him a “China-bashing eccentric,” and much of the US economics community was surprised by his appointment to the White House.

But Navarro does fit with the Trumpian worldview that the US is a victim and that there is no win-win situation in international economic dealing.

”the best way to grow faster is by closing this deficit

He is also concerned that foreign countries will buy up the US’s military industrial complex:

At this point Navarro is hysterical, painting a picture of a US that is rapidly selling itself off bit by bit.

This not the country of Google and Exxon Mobil. It’s certainly not the country of Boeing and Lockheed Martin. This is a vision from a man who desperately fears a modern, globalized world and the change it brings with it.

The things Peter Navarro wants to fight against — the things that keep him up at night — are windmills, waving their blades at a paranoid mind. To charge them he wants to disrupt global supply chains and put up tariffs; he wants to bully the US’s way into new markets and upset our trading partners. This is no way to do trade policy.

But Navarro and his team seem on a reckless mission to try.