Trade Wars and Real Wars

[orangecrush]

The world is rudely awakening to the dangers of President Donald Trump’s tariffs. Markets are correcting. Countries and industries are scrambling for exemptions. Economists now see greater downside than upside to growth projections for the U.S. economy this year. But the hazards could be even greater than anyone wants to admit. As protectionist sentiment rises, so does the risk of war.

The link between international commerce and peace has been apparent for so long that it is sometimes taken for granted. As the German philosopher Immanuel Kant wrote in his 1795 essay, Perpetual Peace, “The spirit of trade cannot coexist with war, and sooner or later this spirit dominates every people.”

That sounds like wide-eyed optimism, but the underlying logic is narrow self-interest. Nations are reluctant to jeopardize benefits from international commerce, especially when their leaders are bullish about future gains. Greater trade and investment cannot guarantee peace, but it raises the cost of going to war.

World War I appeared to toss that idea out and set history’s dustbin ablaze. Prior to the war, globalization was racing along. Between 1870 and 1914, trade rose to 8.2 percent of global gross domestic product. “The complexity of modern finance makes New York dependent on London, London upon Paris, Paris upon Berlin, to a greater degree than has ever yet been the case in history,” Norman Angell wrote in The Great Illusion, his 1910 opus that declared war obsolete.

But Germany’s aggression proves the point. German leaders believed the economic environment was turning against them, as the political scientist Dale Copeland has shown. With protectionist policies ascendant—in Britain and its colonies and in the United States, France, and Russia—Germany feared being squeezed out of global markets. These falling trade expectations made war a more attractive avenue for revising the status quo.

As Trump weighs additional protectionist measures, a similar gap is emerging between assumptions about globalization and expectations about trade.


https://www.csis.org/analysis/trade-wars-and-real-wars


Enter Bolton.