Interview: No winner in trade war, says expert

By: Yoo SeungkiFrom:English Edition of Xinhua | Updated: 2018-Apr-3 10:12
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SEOUL, April 2 (Xinhua) -- A trade war triggered by U.S. President Donald Trump's protectionist moves to impose steep tariffs on foreign steel and aluminum would be bad news for all, said a South Korean trade expert, adding that it would bring chaos to the world economy in the worst-case scenario.

"There is no winner in a trade war. It is like wallowing in mud," Han Jae-jin, senior research fellow at Hyundai Research Institute, said in an interview with Xinhua on Monday.

Han viewed the current trade friction as a war of nerves, not an actual launch of a trade war. But he noted that in the worst-case scenario, the United States could, wittingly or unwittingly, be drawn into a phase of trade war that would bring chaos to the global economy.

He added that the Trump administration is unlikely to make the wrong choice since it could damage the global and U.S. economies.

Trump announced plans last month to slap heavier tariffs on imported steel and aluminum from several countries, including China, in an effort to protect U.S. steel jobs and domestic steelmakers.

Han, however, noted that the protectionist moves would not create jobs in the U.S. steel industry as China's dependence on the U.S. market for steel exports is inconsequential.

The United States is the world's biggest steel importer, and imports such products from more than 100 countries.

However, China, the world's No.1 steel exporter, was 11th among U.S. source countries of steel imports in 2017, accounting for just 2 percent of total U.S. imports.

Even though higher tariffs shrink the U.S. import of Chinese steel, the U.S. manufacturers will seek out cheaper steel imports rather than depend on domestic suppliers. It will do no good to U.S. producers and job creation in the U.S. steel industry.

If Trump chooses to broaden the imposition of steep duties on many more countries, it may encourage U.S. suppliers to reduce steel production and cut steel jobs in a bid to tackle higher steel prices caused by higher duties on imports.

Heavier steel tariffs can also rapidly bring inflation to the U.S. economy, as U.S. manufacturers may try to pass higher steel costs onto consumers, prompting the U.S. Federal Reserve to speed up its rate hike for the rest of the year.

"With the steeper steel tariffs, the U.S. economy will not improve... (The steeper tariffs) mean everybody destroying itself (with retaliatory measures toward each other)" Han said.

Han said China and the European Union will never sit idle nor look on at Trump's tariff decision, which can spur retaliatory measures and lead to a trade war.

He saw a low possibility of a trade war taking place due to the possible chaos wrought on global trade.