US President Donald Trump has been lampooned, with good reason, for his claim that “trade wars are good, and easy to win”. But in one sense he is right. The American economy is huge and relatively closed. That combination means trade turmoil involving the US can inflict much greater damage on others than its own economy has to absorb.
Despite a contraction of US industry and higher prices for American consumers, overall growth remains adequate. It remains to be seen how the latest market gyrations affect the economy, but so far, the brunt of the macroeconomic damage has fallen not just on Mr Trump’s main target — China — but on Europe, which has been caught in the crossfire.
Unlike the US, the EU economy is as trade intensive as China’s, and accounts for the largest share of world trade of the three. While China is experiencing a slowdown partly due to US actions against it, Europe is suffering just as much in collateral damage.