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Luis BARRUETO is a journalist from Guatemala, currently working in trade policy at the Secretariat for Central American Economic Integration (SIECA). Studied business and finance journalism at Aarhus University in Denmark and City University London.
Catherine Rampell is as poignant as it gets when she describes US President Donald Trump's stance on trade as stuck in the 80's – in the 1680's.
Policies including the recent announcement of tariffs on steel and aluminum against imports from the European Union, Canada, and Mexico, do not only lack economic sense – they are only a small portion of imports of these metals to the US –, they also target key allies, risking alienating them further. And these policies have a close resemblance to classical mercantilism, as practiced in the 17th and 18th centuries.
The world has come a long way from the practice. But Trump's policies continue to play out under a misguided logic of zero-sum arrangements, where everyone was suspicious of everyone else.
"There basically was no such thing as modern-day trade diplomacy; tariffs were high, and no one would have trusted anyone to stick to trade agreements anyway, since everyone was trying to maintain trade surpluses at once. Which is fundamentally impossible."
The piece cuts through the chase of much political economy discussions these days. But if you have the patience to dig deeper in those, and while we wait for Trump to realize that trade is a positive sum game, pair this reading with a chronicle on how the President's misguided views have led him to lock horns with other developed nations' leaders.
As Ana Swanson writes, "Mr. Trump’s advisers have criticized these as bad deals, and argued that his “America First” strategy did not mean “America alone.” But with the world’s other leading economies moving ahead with trade pacts and united against Mr. Trump’s trade approach, the United States certainly appears to be at odds with many of its former partners".