Trade wars get you nowhere, but they can be hard to avoid.
One of the markets of the decline of liberalism over the past 20 years has been the failure of the WTO (Previously GATT) to make further progress and build on the achievements of the mid-1990's.
There are many reasons for this;
- Globalisation has been so successful and become endemic, the need to promote trade has therefore fallen as people thought the battle was won and politicians no longer gained much political capital from signing trade deals (something in the UK at least Brexit will change).
- China has spent a long time getting into the WTO process on its own terms, and using the traditional Chinese policy of taking things very slowly, has succeeded. With the world in a great place to receive Chinese exports, China has no interest in changing the status quo.
- Also though, of course, the contradiction of globalisation is that it has been unevenly distributed. China and Asia as a whole have done very well, Europe OK but not so much, relatively America has done badly - we may have noticed since the Great Financial Crash that politics has started to be heavily impacted by some of these changes.
- Which in turn has led to Trump and his businessmen's eye for helping out the US firms. This plays really well to his voting base. It is not very likely to help the world economy though, as tit for tat economic barriers will reduce global trade overtime and lower overall GDP.
Which in and of itself will affect the largest trading countries the most, which at the moment is the group doing the grandstanding. Of course, underlying Trump's anger are some stark truths, Chinese steel is very cheap, the central government has over-procured kit and enable effective dumping on the world market, they have done the same with Solar panels. This does indeed hurt US steel manufacturers - but longer term, it helps make cars, bridges and buildings cheaper in the US. It acts as a transfer of Chinese labour and wealth back to the US. This is a good thing, in the UK for a long time we realised that it was better to be the best at a few things or grow new industries than to try and prop up the failing ones. As a result we had an overall economic transformation, even with the deeps scars it left behind.
It requires a grand vision though to see this, which is why trade wars are the operative of base political operators. Sadly at the moment, politics across the world is very base (see Italian elections today where no centrist parties are going to be near Government, imagine the UK with a UKIP/Green stand-off as the two biggest parties), so we maybe discussing trade war impacts for sometime to come.