Letter to the editor. More protectionism is not the way forward
US President Donald Trump have introduced extensive customs In order to reduce US trade deficits and protect the country’s industry. However, a general duty of 10 percent on almost all imports, as well as higher rates for specific goods and countries, risks creating more problems than they solve.
Instead of solving imbalances in the world economy, these measures risk leading to trade war, inflation and more expensive goods for ordinary Americans. The specific tariffs that are now being introduced include 20 percent on imports from the EU, 24 percent on Japan goods, 26 percent on imports from India and as much as 34 percent on Chinese goods.
However, US trade deficit is not just about unfair trade, but also about many of the country’s trading partners having too large surplus. The EU, China and Japan all have significant current account surplus, which means that they export more than they import – in practice they live under their assets.
Many countries’ economies is dependent on a strong export sector and at the same time has a weak domestic consumption. If the surplus countries instead stimulated their own demand through reduced private savings, more investments in welfare and infrastructure and a more expansionary fiscal policy, trade occupation would decrease naturally, without the need for customs.
Punishing imports rarely leads to positive effects. Customs drive up prices for goods, press consumers and risk creating countermeasures from affected countries. A better strategy for creating balance would be to get surplus countries to raise their wages, invest more in welfare and infrastructure and reduce their excessive savings. It would benefit both their own citizens and the global economy.
Trade war and protectionism are not the way forward. Instead, the United States and its trading partners should work together to create a more balanced and sustainable global economy. We must stop using short -term tariffs as tools and instead focus on long -term solutions for a more fair and sustainable global economy.
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