Thursday, June 28, 2018
“I saw that you could not separate the idea of commerce from the idea of war and peace. You could not have serious war anywhere in the world and expect commerce to go on as before. And I saw that wars were often caused by economic rivalry. I thereupon came to believe that if we could increase commercial exchanges among nations over lowered trade and tariff barriers and remove international obstacles to trade, we would go a long way toward eliminating war itself.”
– Cordell Hull, former Secretary of State, in his memoirs after observing two world wars –
With the U.S. President continuing to stoke fears of a trade war with major trading partners, it’s worth knowing exactly what defines a trade war. According to Marianne Schneider-Petsinger, a U.S. geoeconomics fellow at the London-based Chatham House, a trade war requires two elements. “One is the tit-for-tat tariffs that set off a downward spiral of protectionism.” (Check). “The other element is that there is no more space for negotiations to potentially de-escalate the dispute.” (Not there yet). Learn more here.