My fears of a collapse in global trade, the likes of which we have not seen since the Great Depression are coming closer and closer to reality.
Shades of Great Depression and Smoot-Hawley Tariff Act
#brexit Great Depression Trade Madness Cometh Againhttps://t.co/OiJzBajgYp pic.twitter.com/hmfTcTz3WR
— Mike “Mish” Shedlock (@MishGEA) November 13, 2016
Sarkozy Proposes Carbon Tax on US, Anti-Dumping Tax, Buy-EU Act
In a world gone mad, former French President and current French presidential candidate Nicolas Sarkozy says France, EU Must Respond in Kind to Trump Moves.
“Europe can no longer be weak, Europe can no longer be naive. We can’t let our industry go,” Sarkozy, the French president from 2007 to 2012 who’s looking to get back into office, said Sunday in an interview with the TF1 television station.
Europe must set up a “Buy Act” that would require foreign companies seeking public contracts to set operations in European countries, Sarkozy said.
Should Trump stick to his electoral promise of exiting the U.S. from the Paris Accord to curb carbon emissions, Europe should set up a carbon tax for U.S. products, Sarkozy also said.
The former French president also called for an anti-dumping tax in Europe. “I believe in trade but I want that, in this world, Europe rearms and defends itself.”
Collapse in Global Trade Agreements
Obama’s Trans-Pacific Partnership (TPP) is dead. Obama’s Trans-Atlantic Trade and Investment Partnership (TTIP) is also dead on arrival.
Neither of those agreements is realistically about free trade. Both contain inane provisions allowing corporations to sue governments. And TPP is mired in global warming muck.
Yet, the collapse of the agreements culminates a long period of dwindling deals of any kind.
Trump is highly likely to label China a “currency manipulator”, and US relations with Mexico are going to suffer whether of not Trump foolishly builds a wall.
Other than the wall, if indeed one is built, it’s highly doubtful anything would have been much different under a Clinton administration.
“Me Too!”
Sarkozy’s “Me Too!” retaliation comments are akin to lemmings following each other over a cliff.
I also liken this setup to a mother chastising her five year old son for some misdeed and receiving the rebuttal, “well Suzie did it too”.
Global Trade Madness
No one wins trade wars, ever. Sarkozy’s comments should be downright scary to any student of history.
Trade tit-for-tat madness is very similar to what we saw in the Great Depression when the Smoot-Hawley Tariff Act raised tariffs on 20,000 imported goods to record levels.
I am in rare agreement with Ben Bernanke who says “Economists still agree that Smoot-Hawley and the ensuing tariff wars were highly counterproductive and contributed to the depth and length of the global Depression.”
Related Articles
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- Hillary Sounding Suspiciously Like Trump On Trade
- Trade With China: Is Obama Any Different Than Trump?
- June 25: Obama Stands by “Back of Queue” Brexit Warning; July 1: US-UK Trade Bill in Congress
Is there a single person in power, anywhere, who understands the benefits of free trade?
Worried about “Fair Trade”? Then please consider “China Doesn’t Play Fair!”
Mike “Mish” Shedlock
