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Oh ! What A Lovely Trade War Summary

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Donald Trump made it very clear, whether it was NAFTA or the TPP, the US will no longer incur trade deficits just for the sake of its global image. In his piece, “Why the White House Worries About Trade Deficits,” Peter Navarro discusses why the Trump administration is right in addressing such trade deficits. In short, Navarro explains how uneven trade and heavy consumption of consumer imports has had an adverse effect on the US economy. Paul Krugman begs to differ. In his piece, “Oh! What a Lovely Trade War,” Krugman explains how trade policy is far more complicated than it seems. Krugman posits that Trump’s protectionist agenda is not a viable solution and that trade, as intended, benefits both the United States and its partners. I argue …show more content…

Trump’s base, as Krugman notes, welcomes the idea of a trade war with the expectation of the US coming out on top. Nevertheless, Krugman argues that trade wars are not the best scenario, because it may never happen in the first place. If the Trump administration was to pursue protectionist policies, it would just provide opportunities for other competitors; because in a game of consumers, the cheapest good wins. The US will have no part in a trade war or competition to begin with. Krugman explains that tariffs hurt the economy, because it spurs inflation and in response the Federal Reserve would raise interest rates, making the dollar stronger and hurting US exports. However, the past decade has shown that a stronger US dollar doesn’t necessarily translate to a decreased amount of exports. In fact, a stronger US dollar is a signal of economic growth and confidence, enabling the US to enhance trade and open new markets. Furthermore, the institutional fragility of the European Union has made the US an even more attractive exporter despite the increasing strength of the …show more content…

The strength of the international system, nonetheless, shouldn’t discourage the US from solving the problem of trade deficits. I argue that although the Trump administration is right in recognizing an issue with our trade deficits, blatant antagonism, as Krugman notes, is not the way to go about solving it. In the international arena, every action warrants a response and Trump’s rhetoric has encouraged China and the European Union to plan for a world without the

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