Monday, June 11, 2018
Is The U.S. Big Enough To Dictate Trade Policy To Others?
Right after World War II, the United States economy was undoubtably the strongest in the world. One reason for that is because the European and Asian countries were devastated by the war and trying to recover. It left the United States in a position to dictate economic policy to the world.
The United States continues to have the biggest economy in the world -- with a gross domestic product of about $20.41 billion. Is that big enough to bully the rest of the world into accepting U.S. trade policy. Donald Trump seems to think it is. He thinks he can put tariffs on other countries, and force them to give in to U.S. economic desires.
He is wrong. While there are a lot of smaller countries that the U.S. can bully, Trump is picking on some economic entities that are now big enough to withstand the pressure and fight back. He is trying to bully China, the European Union, and the G-6 nations (the G-7 without the U.S.).
Those entities do not have tiny economies anymore. China has a GDP of $14.09 billion (and its growing fast). The G-6 countries have a GDP of $19.22 billion (and Trump's performance last weekend has united them). And the European Union has a GDP of $19.67 billion (less than a billion below the United States).
They are big enough to play economic hardball with the United States -- and that is especially true if you combine the G-6 and China, or the European Union and China. Trump has said a trade war would be easy to win, but he's picking on economic entities that are strong and capable of fighting back. They can hurt the U.S. as much (maybe more) than the U.S. can hurt them in a trade war.
Trump is living in the past, but the world has changed. In this modern world, we must get along with our allies and follow policies that are good for all -- not just the United States.