You are here

Trade wars and an arms race will give way to world disorder

Mar 06,2018 - Last updated at Mar 06,2018

The month of March began with a sinister sense of déjà vu at a global level. US President Donald Trump’s threat to drag the world into a trade war, which in his opinion is “a good thing,” and Russian President Vladimir Putin’s flamboyant unveiling of a new generation of nuclear-tipped intercontinental ballistic missiles (ICBMs), which in his view are “invulnerable to enemy interception”. The announcement, coming weeks before Putin is slated to win another term as Russia’s president, is seen by analysts as setting the clock back to an era of superpower arms race amid growing fears that the world may be entering a new cold war.

In his commitment to his own mantra of putting “America first”, President Trump has been consistent in at least one thing, fulfilling the campaign promises that appealed to his core voter base. Among the things he repeatedly said is the unproven and controversial allegation that when it came to free trade, America was being swindled by its allies and foes alike. His populist-driven response would be to renegotiate multilateral trade agreements, such as NAFTA, and to protect beleaguered US industries, such as steel, oil, auto and coal mining.

And, surely, he did take a couple of steps towards that endeavour last Thursday by announcing that he was about to impose a 25 per cent tariff on steel imports and 10 per cent on aluminum. Two days later, amid strong rebukes from America’s closest allies and China, the president threatened to increase custom duty on cars imported from the EU. Whether he will make good on his threats later this week remains to be seen.

He justified his hard-hitting position on global trade in a number of tweets, one asserting that the US has “$800 billion yearly trade deficit because of our very stupid trade deals and policies. Our jobs and wealth are being given to other countries that have taken advantage of us for years. They laugh at what fools our leaders have been. No more!”

Canada, the largest exporter of steel to the US, followed by the EU and South Korea, promised to defend Canadian industries. EU officials said they will consider slapping 25 per cent tariffs on major US imports, worth $3.5 billion, including Levi’s jeans and Harley-Davidson motorbikes. China, on its part, said it will take “necessary measures” if its interests were hurt, while Brazil, Mexico and Japan said they will retaliate if Trump goes ahead with his threats.

The International Monetary Fund, the World Trade Organisation (WTO) and even some Republicans criticised the president’s approach and warned of destructive trade wars. Since the mid-1990s, the WTO has been working to remove trade barriers and regulate international trade. And since then a new intricately connected, interdependent globalised trade infrastructure has emerged, one that is impossible to roll back.

Imposing tariffs on imports and abandoning multilateral trade agreements is contrary to the interests of all sides. For example, President Trump is reminded that one major European car manufacturer, BMW, makes more cars in its US factories than in Germany, where it is based. And it’s only reasonable to assume that countries will retaliate to US measures by imposing tariffs on imports, thus hurting both consumers and manufacturers on all sides.

Trade wars had become a thing of the past. It was also a time when the US and the rump Soviet Union engaged in a costly and dangerous arms race, especially at the height of the Cold War. Putin’s excuse for pouring billions into Russia’s resurgent arsenal is based on America’s withdrawal from the Anti-Ballistic Missile Treaty in 2002 and its subsequent investment in an anti-missile shield in Western Europe. Regardless of Putin’s reasons, his boasting of controlling a new generation of ICBMs will surely be met with an unyielding US response. An arms race seems inevitable and this time it will include China, which is both an economic and military giant.

Putin wants to make Russia a great superpower again. His territorial and geopolitical ambitions have been demonstrated clearly in the past few years in the Crimea, Ukraine, Syria and the Baltic States. With US-Russia relations at their lowest point in decades, Cold War-like conditions are quickly forming. A global trade war and a multilateral arms race pose an unprecedented double threat to world and regional security and stability. Both will cost trillions of dollars and neither will end with a clear winner.

The existing world order has been criticised by many for its many faults. It has been responsible for major climate and environment-related catastrophes, a widening gap between the rich and poor, regional instability leading to acute humanitarian crises and the emergence of non-state radical groups and weakening of conflict resolution bodies, such as the UN. But the alternative now, in the wake of last week’s events, appears to be worse, a world disorder leading to global chaos. Small and underprivileged countries will bear the brunt of those two threats.

A multilateral approach by key countries and blocs is needed to avert certain collapse. The US, Russia, China and the EU must work together to stem the threats of global trade wars and an unchecked arms race. The pressing reason should be that no winners will emerge out of the two confrontations and everyone stands to lose.


The writer is a journalist and political commentator based in Amman.

29 users have voted.

Add new comment

This question is for testing whether or not you are a human visitor and to prevent automated spam submissions.
5 + 3 =
Solve this simple math problem and enter the result. E.g. for 1+3, enter 4.


Get top stories and blog posts emailed to you each day.