Trump’s threat of a trade war is driven by the West’s fear of the rise of the rest

Andrew Sheng says as more people across the globe become middle class, the distribution of power will change, and national governments must do their best to help those left behind. Stirring up anger against globalisation, trade and China will only lead to conflict

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Abandoned long ago, the Bethlehem Steel power plant stands in decay in Baltimore, Maryland, on March 9. US President Donald Trump has imposed tariffs on steel and aluminium imports despite global criticism of the plan. Photo: AFP

Published: 2:17pm, 16 Mar 2018Updated: 12:58pm, 23 Mar 2018

Hardly a week goes by without another tweet storm from Washington DC. “You’re fired” was heard by both secretary of state Rex Tillerson and the administration’s top economic adviser Gary Cohn (although, strictly speaking, Cohn resigned). Cohn left after clashing with US President Donald Trump over trade policy, with Trump tweeting that “trade wars are good”.

There are three basic reactions to the threat of a trade war.

The first is that the real aim is China, so everyone else just wants an exemption from the steel and aluminium tariffs Trump has imposed. That’s the heads-in-sand approach.

The second is that one should not take Trump seriously, since rationally we know that no one wins in a trade war. The collateral damage – and not just to China and the United States – is so great that we may repeat the disastrous 1930s, when US protectionism sent everyone into the Great Depression. In other words, realistically, everyone will settle down to negotiation.

The third view is that you should watch out for a trade war.

Most analysts are paying attention to the views of US trade representative Robert Lighthizer and National Trade Council director Peter Navarro, but I was listening carefully to Steve Bannon. Since stepping down as both White House chief strategist and Breitbart News executive chairman, Bannon has become a lightning rod for the alt-right movement, first in the US and now in Europe. And in my opinion, he still has the best strategic overview of Trump’s White House agenda.