Do not fear a trade war (part 1) - Josef Portelli

Anyone following the international news could not have missed the fact that frictionless trade between the world’s major economic powers and access to one another’s domestic markets are under attack. The use of the phrase ‘trade war’ is on the rise.

During the 2016 US presidential campaign Republican candidate Donald Trump criticised multilateral trade agreements like the North America Free Trade Agreement (Nafta) and the Trans Pacific Partnership (TPP). Soon after he became President Trump pulled the US out of the TPP negotiations and promised to renegotiate the terms under which his country joined Nafta.

Matters started to heat up this year when in January the US imposed tariffs on imported washing machines and solar panels. Then in June the Trump administration imposed tariffs on imported steel and aluminium. Exporters from the EU and neighbouring Canada were not spared. Canada and the EU retaliated with selected targeted tariffs on imports from the US. This month Trump announced further tariffs affecting $34 billion of Chinese imports with China hitting back with tariffs on goods imported from the US. According to CNBC, Trump threatened to place tariffs on all $505 billion...