Free Traders Can't Name a Single Trade War

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Failed 2012 presidential candidate Mitt Romney has been claiming that Donald Trump's (and by logical implication, Bernie Sanders') proposed rejection of free trade would start a trade war and tip America into recession.

[Ian Fletcher| March 8, 2016 |Huffington Post]

Failed 2012 presidential candidate Mitt Romney has been claiming that Donald Trump's (and by logical implication, Bernie Sanders') proposed rejection of free trade would start a trade war and tip America into recession.

Economists Paul Krugman and Howard Richman have both neatly summarized why this simply isn't how the economics works, even if a trade war does happen, so I won't repeat their points here.

But I have a simpler one: Trade wars are mythical. They simply do not happen.

If you google "the trade war of," you won't find any historical examples. There was no Austro-Korean Trade War of 1638, Panamanian-Brazilian Trade War of 1953 or any others. History is devoid of them.

(Please don't respond with that old canard about the Smoot-Hawley tariff of 1930 starting a trade war and causing the Great Depression. It doesn't stand up, as actual economic historians from Milton Friedman on the right to Paul Krugman on the left have documented. See here, and here, and here.)

Trade wars are an invented concept, a bogeyman invented to push free trade.

The giveaway, of course, is that free traders claim both that a) trade wars are a terrible threat we must constantly worry about, and b) it's obvious no nation can ever gain anything from having one. Think about that for minute.

Now my challenge to free traders (and to my readers) is this: write to me and name a trade war. I promise to publish any results I get.

Note: Trade wars started for non-economic reasons in wartime, with the deliberate intention of screwing up the other side's economy, don't count. We were quite right not to be selling Germany steel in 1942.

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  • commented 2016-03-09 11:44:52 -0500
    If it is Iran or North Korea it is called “sanctions”, if it is China – oh my gosh – it is a trade war. Why the double standard? In spite of China’s nuclear dealings with – well – fill in the blank. Everybody practices “trade warfare” all over the place if it is foreign policy, but explicitly as economic policy – oh my gosh – politically incorrect.
  • commented 2016-03-09 09:56:04 -0500
    I understand Ian’s point of view and it makes sense but from my perspective as the owner of a manufacturing company in the USA, I believe we are already in a trade war. My definition of a trade war is a persistent and significant imbalance of trade between two countries.
    We import cheap goods and export jobs. The irony is that the export of jobs has so eroded income in the USA that the loss of purchasing power has more than offset the lower cost of the imported, now not so cheap, goods.

    The competition my company faces globally is not with other manufacturing companies; it is with governments—-especially China, Japan, Germany and Mexico. Our government does not fight for its domestic manufacturing…so we are unarmed pacifists who are losing this trade war badly.