The US has fewer steelworkers than it has manicurists. The market value of the US steel industry is about 0.1 per cent of the stock market. Yet steel is a key input into industries throughout the economy that employ about 50 times as many people as the steel industry does and compete internationally.
Donald Trump’s trade policy violates every rule of strategy
By: Lawrence Summers – Harvard University
US-China
The Chinese government has no policy levers that could reduce the bilateral balance by the mooted $100 or $200 billion. If it wanted to give Trump a superficial “win,” it could reduce the bilateral deficit some by buying more American natural gas or by routing smart phone exports through a third country like South Korea. But the economics would be illusory. There would be virtually no effect on the overall US trade deficit: We would sell the same natural gas to some other country if we didn’t sell it to them; and in reality those smart phones already get about 95% of their value added from South Korea, the US, and other countries anyway.
Trump’s On-Again Off-Again Trade War with China
By: Jeffrey Frankel – Harvard University
Addressing the IP issue
The Chinese government has long required American companies, which wanted to transfer their manufacturing to China, to establish a joint venture with a local Chinese entity. As a result, willingly or unwillingly US companies ended up transferring significant know-how along with sensitive, proprietary information to the local Chinese partner. In order to solve this problem a better policy to tariffs would be for the US to negotiate high-standard free trade agreements with other countries that could take over China’s role in America’s ICT supply chain.
Time to Move the American ICT Supply Chain Out of China
By: Alexander Benard – Stanford University
US-EU
In other words, to the extent that Trump just wants allies to reduce their exports to the US, this can be accommodated by EU producers increasing prices and pocketing the higher revenues – never mind that US consumers of steel would thereby be subsidizing foreign steel producers.
But the EU has tried hard to render VERs illegal!
Trump’s Shot Heard Round the Foot
By: Daniel Gross – CEPS
Quantifying the impact
Among EU countries, Ireland is still the most exposed but roughly 7.8% of aggregate domestic value-added (i.e. GDP) ends up in final goods and services purchased in the US. While arguably this is a lot, Ireland’s exposure measured in value-added terms is about half of that derived from gross bilateral exports (amounting to approximately 13.5% of GDP). The value-added figures also show relatively large exposures to US demand for Germany, the Netherlands and Belgium, to the tune of 3.5% of the GDP. On the other hand, Spain, Greece, Cyprus, and Malta are the least vulnerable to US final consumption. Large countries such as France and Italy sit in the middle of these extremes at around 2%.
Trade wars: Just how exposed are EU Member States and industries to the US market?
By: Francesco Chiacchio, Konstantinos Efstathiou – Bruegel
