Maybe Trade Wars Are Not Easy to Win

Wall Street Journal editorial: “President Trump claims trade wars are easy to win, but that boast looks worse than ever amid the financial carnage from his latest threat of tariffs on Chinese goods. His trade war has now become a currency war, which raises the potential economic harm to another level.”

“To Mr. Trump, all of this is part of his grand trade showdown with Chinese President Xi Jinping. He was furious last week when his negotiators returned from China without significant progress. So he slapped on new tariffs, which he thinks will impose more pain on China than on the U.S.”

“But if the President believes adviser Peter Navarro’s counsel that the U.S. is immune from all this, markets are saying the opposite. The Dow Jones Industrial Average is now lower than it was in January 2018 when he began his game of China chicken, despite two years of strong corporate earnings. The uncertainty from tariffs has chopped U.S. GDP growth to 2% from 3%. Business investment is falling and global manufacturing is nearly in recession.”