Every time the world economy totters and governments start putting up trade barriers, a ritual alarm sounds that we’re heading back towards the destructive protectionism of the 1930s.In reality we’re not time-travelling to the Depression so much as to the 1970s and 1980s, which were far less economically calamitous. (Also, if we’re going culturally retro, it’s surely better to have punk, disco and electropop than big band and swing.)
In the 1970s, the US began to face what (rather quaintly now) seemed the existential threat of Japan emerging as a major exporter. Washington forced Tokyo into a series of exercises in “managed trade”, notably for autos and semiconductors.
In an echo of that era, Donald Trump (crudely) and Joe Biden (with more precision) have used quotas and trade barriers to protect the US steel and aluminium industry. The Biden administration is currently threatening the EU with the reintroduction of tariffs — temporarily suspended since 2021 and replaced with import quotas — unless Brussels signs up to a club to keep out steel imports from China. Brussels is correctly reluctant to do so. Certainly in its original version it’s a pretty blatant breach of World Trade Organization law and would undermine the carbon border pricing scheme that’s central to its environmental policy.