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Macroeconomics: The Future

Why Is Donald Trump Waging a Trade War? DeLong FAQ

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DeLong FAQ: Why Is Donald Trump Waging a Trade War? You ask: who are the people who would want to see this U.S.-China trade war happen? We have been unable to find any. Usually pressure to wage a trade war bubbles up from powerful economic groups that are or that believe they are being gravely injured by imports. Usually there are large advertisements in the New York Times and the Washington Post saying that it is time for the country to get behind the president, who is trying to keep other countries from taking unfair advantage of Americans.

We have not had any of that this time. There has been no mobilization of economic interests that favor a trade war.

In large part, there has been no mobilization because the costs of trade war are high relative to benefits. The economies are deeply intertwined at the industrial and sub-industrial level because it has become so cheap and so profitable to send plans and goods across the Pacific, and huge numbers of people have taken advantage of it.

There are people who will cheer a trade war. With them, however, they are cheering not because they see it as making America or their part of America richer happens. It is, instead, much more cheering the local sports team of your municipality when it wins a victory—they have won something, and so you cheer for them. However, what it would mean or what it would take for Trump to “win” this trade war is unclear.

Viewed as an economic policy I think, as I have said before, that the only people who seem to believe in this trade war are Donald Trump, Peter Navarro, and Trade Representative Robert Lighthizer—and I have a hard time believing that Lighthizer believes what he finds himself saying.

Certainly the Republicans in Congress have major, major disagreements with the policy. They have been quiet. I believe they have been quiet because they accept the principal that to make the president of your party look weak or stupid is to put your side’s majority and possibly your seat at risk. That is not how it is is supposed to work. Political scientists have a lot to think about in terms of the foundations of their understanding of the American government.

I hope that after this November Republicans in Congress will decide that their electoral future requires that they be much more representatives of the people than cheerleaders for Trump, and that we will see a 25th Amendment remedy. I do not expect this hope to be realized. I think the chances are pretty good that we will have an informal, silent coup—like when Howard Baker became effective acting president during the second Reagan administration. But I will probably be wrong.

This is not a situation I ever expected the United States to be in.

It is now more than two years since then-IMF Deputy Managing Director Min Zhu asked me what we people in the United States are going to do to fix our broken political system. I had no good answer to him then. I have no good answer for him now.