Trump’s trade war threatens global peace

Donald Trump arriving at Ellington Field Joint Reserve Base in Houston, Texas.

Trade war. Surely the clue is in the name. Incredible as it may seem, the United States has just declared war. Not on adversaries like North Korea, Iran or Russia. Instead it has declared war on Europe, on us. The modern world has lost the habit of thinking in a historical way about free trade.

Today’s global economy has been predicated for more than half a century on open international markets. Through most of that period, arguments over trade have been arguments about good forms of free trade – such as the tariff-free flow of products that boosts prosperity all round – versus the bad forms – such as lower labour standards, tax avoidance or the undermining of public institutions.

As a result, perhaps we have forgotten that the alternative to trade peace is not only trade war, but sometimes war itself.

In an abstract sense, Donald Trump may have been right to invoke national security this week when he slapped a 25% tariff on European and Canadian steel and 10% on aluminium. “Economic security is military security,” declared the US commerce secretary, Wilbur Ross. That remark echoes Adam Smith’s celebrated observation in the 18th century that defence was more important than opulence.

Trade and national security are indeed umbilically linked. Each provides the conditions and stability necessary for the other. But trade can also be used as a weapon of war when states are enemies. Smith lived in a Europe where trade and military conflicts often overlapped. We don’t – at least not recently and not yet. Neither Europe nor Canada is in reality an enemy of the US. With China, it’s not so clear.

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