Is 'Trade War' Accurate?
MICHEL MARTIN, HOST:
We're going to start the program today talking about trade because, as you've no doubt heard, the world's two biggest economies are now squaring off. The United States and China announced tens of billions of dollars of tariffs against each other. Those started yesterday. People all along the supply chain all around the world stand to be affected. So we're going to ask - is this now a trade war? We're going to hear from a business owner who's living this issue in real time and is worried about the effect on his business. And we're also going to hear from a representative from the steelworkers' union, which strongly supports the tariffs.
But we're going to start with David Wessel. He's reported on economic policy for years. He's also director of the Hutchins Center at the Brookings Institution, which focuses on fiscal and monetary policy. And he was kind enough to join us here in our studios in Washington, D.C. Welcome back. Thanks for joining us.
DAVID WESSEL: Oh, good to be here.
MARTIN: So, first of all, could you just give us a sense of what's happened so far with these tariffs?
WESSEL: Right. So Donald Trump ran for president recognizing that there was a lot of anxiety in America about globalization, and he promised to do something about it. He thought that his predecessors had cut lousy trade deals with our trading partners, and, for about a year, he did nothing but talk about it. And so the talk was his bark, his worth and his bite. But, earlier this year, talk turned to action, and, in the spring, he imposed tariffs on steel and aluminum that we import not just from China but from all over the world - from Canada, from Europe and places like that.
Those countries have retaliated now, putting tariffs on our goods. The Canadians are putting tariffs on, for instance, exports of ketchup, of all things. And then, this week, the president upped the ante by putting new tariffs on Chinese goods - mostly machinery and stuff like that that we import from China. And the Chinese have responded with tariffs of their own on our goods.
MARTIN: So now that the U.S. has placed upwards of $34 billion of tariffs on China as of yesterday, and their government has retaliated, given everything you've just told us so far, is it accurate now to call this a trade war?
WESSEL: I think so. It's in the early stages. The U.S. economy is doing pretty well now, despite these taxes on our imports because the rest of the economy is so strong. I think when people usually talk about a trade war, they imagine this going on for months and months and months and escalating. So maybe this is the trade skirmish stage.
MARTIN: But are there winners and losers so far?
WESSEL: Always winners and losers in trade. So, for instance, if you're a domestic producer of aluminum or steel, you have less competition from abroad, so you've seen some steel mills picking up production and stuff like that. But there are many more people who work in industries that use steel than that actually make it.
MARTIN: Well, as we said earlier, this has the potential to affect much of the world economy. And we decided to call two people here in the U.S. who have a direct stake in this, who've been watching this closely, and we're going to hear from them. Now, we're going to ask, can you stand by for a few minutes and hear what they have to say?
WESSEL: Sure. I'd be happy to.
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