Trade wars have led to both World Wars

While trade war threats ramp up between Donald Trump and China there’s a timely warning that major trade wars have contributed to escalations into both World Wars.

CNBC: Trump says he’s ‘ready’ to put tariffs on all $505 billion of Chinese goods imported to the US

  • President Donald Trump has indicated he is willing to put tariffs on all $505 billion of Chinese goods the U.S. imports.
  • The rhetoric ramps up the U.S.-China trade war another step, though each country has issued just $34 billion in tariffs so far.

President Donald Trump has indicated that he is willing to slap tariffs on every Chinese good imported to the U.S. should the need arise.

“I’m ready to go to 500,” the president told CNBC’s Joe Kernen in a “Squawk Box” interview aired Friday.

“I’m not doing this for politics, I’m doing this to do the right thing for our country,” Trump said. “We have been ripped off by China for a long time.”

Trump said the U.S. is “being taken advantage of” on a number of fronts, including trade and monetary policy. Yet he said he has not pushed the tariffs out of any ill will toward China.

“I don’t want them to be scared. I want them to do well,” he said. “I really like President Xi a lot, but it was very unfair.”

From The Diplomat: Trump’s Trade War on China Is About More Than Trade

Against this backdrop, the trade war can be viewed as a paradigm shift of Washington’s China policy. Along with other recent developments in U.S. policy, such as the Taiwan Travel Act passed in February and the passage of U.S. Navy warships through the Taiwan Strait, the trade war is, in effect, part of a much larger strategy of hedging.

Once we realize that the trade war is not merely about trade, we can then appreciate the very real potential for large-scale conflict between the United States and China.

Dene Mackenzie at ODT looks at some history: Trade wars catalysts for world war, the past teaches

History often repeats itself if we do not learn from it. The two full-blown trade wars some 80 and 100 years ago helped to ignite the two world wars.

Trade wars can also cause currency wars.

The end of  World War 1 sparked the first worldwide currency war, starting in Weimar Germany in 1921, followed by France in 1925. In the end, all the major economies scrambled to devalue their currencies — sterling, the franc and the US dollar — throughout the 1930s.

In 1930, US president Herbert Hoover signed into law the Smoot-Hawley Tariff Act, which intensified the currency war and deepened the Great Depression. The protectionist law raised tariffs on more than 20,000 imported products and triggered retaliation by many of the United States’ trading partners.

Trade wars stoke nationalism and hatred among people and finally trigger wars, as evidenced by the breakout of World War 2.

The Japanese invaded Manchuria in 1931, and the whole of China in 1937; the Germans invaded Poland in 1939, then the rest of Europe; and the Japanese attacked Pearl Harbour in 1941.

A quote often attributed to the 19th-century French economist, Frederic Bastiat, goes: “When goods do not cross frontiers, armies will”.

The geopolitical situation has changed a lot over the last two centuries – but as WW1 and WW2 showed, military might and technology has increased substantially. The risks are much higher when nuclear armed countries are involved.

Especially now when the erratic and loose-mouthed Trump is on one side of the tensions.

We don’t want to hear “I meant yesterday that I definitely wouldn’t be launching missiles immediately, not would“.

The trade war with the US could not have come at a worse time  for China, which had just begun focusing “in earnest” on fixing problems in its economy, JP Morgan analysts said on Wednesday.

…those indirect effects could lead to large collateral damage, they said.

There’s a lot of gamesmanship going on, and there are also major risks to local economies and the world economy.

Bluster and threats are often eventually moderated by discussions and negotiations leading to reasonable solutions. But not always.

There’s also always risks of things escalating into military war.

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13 Comments

  1. Henry Kissinger: ‘We are in a very, very grave period’

    The alternative, Kissinger adds, is not appealing. A divided Atlantic would turn Europe into “an appendage of Eurasia”, which would be at the mercy of a China that wants to restore its historic role as the Middle Kingdom and be “the principal adviser to all humanity”. It sounds as though Kissinger believes China is on track to achieve its goal.

    America, meanwhile, would become a geopolitical island, flanked by two giant oceans and without a rules-based order to uphold. Such an America would have to imitate Victorian Britain but without the habit of mind to keep the rest of the world divided — as Britain did with the European continent.

    From Financial Times https://www.ft.com/content/926a66b0-8b49-11e8-bf9e-8771d5404543

  2. Blazer

     /  July 21, 2018

    Kissinger is a warmonger from way back.The premise of the OP is encapsulated by this so called ‘conspiracy theory’…except the facts back don’t lie.

    • David

       /  July 21, 2018

      Agree Blazer Kissinger is a hideous person, he was relevant 50 years ago and no one should take any notice of him now. I put him in the same basket as all those other ageing neo con republicans who just seem to itch on the trigger finger looking to intervene somewhere.
      Lindsay Graham, John McCain, Newt Gingrich, Pat Buchanan et al.

      • Alan Wilkinson

         /  July 21, 2018

        I don’t agree at all. It was an interesting interview if you read it. Kissinger was responsible for Nixon’s rapprochement with China and ending the Vietnam war for which he received the Nobel Peace Prize – having earned it, unlike Obama. Nothing in the interview suggests he is looking for military engagement also unlike most of those you list.

  3. David

     /  July 21, 2018

    With all due respect the 2nd world war wasnt caused by trade wars, certainly it was a big part in the lengthening of the depression in the US but the subjugation of the germans and their swingeing war reparations and then hyper inflation gave Hitler a foothold.

    • No, it wasn’t a trade war ! That idea is an over-simplification.

    • Gezza

       /  July 21, 2018

      US-driven Economic sanctions against Japan were probablyTHE most significant factor that led to the Japanese attacks on Pearl Harbour, Singapore, Hong Kong, Darwin & all the territories they seized extremely rapidly were seized primarily to secure the resouces they had been denied & needed to expand their economy & their military & prevent the other Great Powers from ever being able to humiliate & constrain them again.

  4. Zedd

     /  July 21, 2018

    ‘In GOD we trust’ : GUNS/gold.. OIL & DRUGS the 3-4 main things that keep their economy running !

    • Zedd

       /  July 21, 2018

      MrT likely has his fingers in them all…..

  5. Alan Wilkinson

     /  July 21, 2018

    I think it’s an unreasonable stretch to claim trade wars significantly contributed to either world war. That said, free trade helps prevent armed conflict. The hope remains that Trump’s actions along with Brexit will force a permanent reduction in trade barriers.

  6. David

     /  July 21, 2018

    No two countries with McDonalds have ever been to war against each other, that may have changed with Putins adventures now but it was always a fun fact and a demonstration of how fabulous capitalism is and what a gift to humanity.