Thread by @scottlincicome

Ok, a quick lunchtime thread on #NotATradeWar...

Trump is actually right in one small sense: we are NOT in a "trade war" with China or anyone else...yet.

First, in sheer numerical terms, the total imports actually subject to new tariffs right now is relatively small: for example, current steel/232 tariffs are on just $29B of $2.3T in 2017 US imports; 2) Chinese tariffs on $3B in US exports are also (so far!) relatively small

Second, the latest round of tariffs on $50B more (for each side) have NOT been implemented yet: USTR issued a proposed list (subject to public comment), and China did something similar. Maybe they never get imposed. Maybe they do. We don't know yet.

That said, it's ABSURD to think this is all no big deal. First, the implemented tariffs are already causing REAL pain for US companies and farmers forced to cope with sudden/unexpected high prices & new tariffs, as well as CHAOS in various markets. That will have a REAL EFFECT.

Second, the proposed tariffs add another level of uncertainty to businesses, investment and markets. Stocks aren't volatile right now bc of potential tariffs on $100B in goods (though certain targeted cos are getting hammered)...

...They're volatile bc of uncertainty & risk - risk of MORE tariffs, less investment, lower future returns/growth, contagion. The uncertainty can also have a real impact on the REAL economy, deterring investment/growth/sales/etc - something the GOP understood only a few yrs ago

(BUT the US economy is huge and complex, and the stock market is too, so there's certainly no sure bet that markets crater bc of a few tariff announcements.)

Third, the USA's acting outside of the established global trading system places the already-weakened WTO under even more strain. If China and others defect too, the whole thing could fall apart - and that would be very, very bad for the US/global economies and national security

Finally, there are the major harms to US credibility. US trade policy is being based on executive fiat/whim ("I WANT TARIFFS") and a total disregard for consensus views on tariffs, trade balances, the WTO, etc. - views also held by the President's own @WhiteHouseCEA, btw

It's just impossible to think this won't hurt the USA's longstanding ability to lead (or at least be relied upon) in re international economic & geopolitical issues. Indeed, it's already happening, as countries refuse to engage on US FTAs and instead join each other (e.g. TPP11)

Maybe China fills this vacuum (they're certainly playing the multilateralist victim right now - aided by the USA). Maybe nobody does. But the USA's absence will hurt everyone - especially the USA.

So should we all FREAK OUT right now bc of a TRADE WAR? No. Not yet, at least. Will markets definitely tank? No, for the same reasons.
But should we just sit back and relax and act as if nothing's wrong, and everything is fine? No, of course not. /fin