Trade war like ‘wallowing in mud,’ leaves no winners, says South Korean expert

A trade war triggered by US President Donald Trump’s protectionist moves to impose steep tariffs on foreign steel and aluminum would be bad news for all, said a South Korean trade expert, adding that it would bring chaos to the world economy in the worst-case scenario.

“There is no winner in a trade war. It is like wallowing in mud,” Han Jae-jin, senior research fellow at Hyundai Research Institute, said on Monday.

Han viewed the current trade friction as a war of nerves, not the actual launch of a trade war.

But he noted that in the worst-case scenario, the United States could, wittingly or unwittingly, be drawn into a phase of trade war that would bring chaos to the global economy.

He added that the Trump administration is unlikely to make the wrong choice since it could damage the global and US economies.

Trump announced plans last month to slap heavier tariffs on imported steel and aluminum from countries including China in an effort to protect US steel jobs and domestic steel makers.

Han noted that the protectionist moves would not create jobs in the US steel industry as China’s dependence on the US market for steel exports is inconsequential.

The United States is the world’s biggest steel importer, and imports such products from more than 100 countries.

China, the world’s No.1 steel exporter, was 11th among US source countries of steel imports in 2017, accounting for 2 percent of total US imports.

Even though higher tariffs shrink US imports of Chinese steel, the US manufacturers will seek out cheaper steel imports rather than depend on domestic suppliers. It will do no good to US producers and job creation in the US steel industry.

If Trump chooses to broaden the imposition of steep duties on many more countries, it may encourage US suppliers to reduce steel production and cut steel jobs in a bid to tackle higher steel prices caused by higher duties on imports.

Heavier steel tariffs can also rapidly bring inflation to the US economy as US manufacturers may try to pass higher steel costs onto consumers, prompting the US Federal Reserve to speed up its rate hike for the rest of the year.

“With the steeper steel tariffs, the US economy will not improve,” Han said.

Han saw a low possibility of a trade war taking place due to the possible chaos wrought on global trade. The author is a writer with the Xinhua News Agency. opinion@ globaltimes.com.cn