Everything seems to indicate that the world has entered a period of four years marked by global commercial tensions. This to the extent that the unrestricted use of tariff commercial policy by the new Government of Donald Trump will bring answers with similar measures by the political leaders of countries affected by the new commercial barriers. Thus, a cycle of reprisals that can grow rapidly, which snowball, and put both international trade and world welfare.
In this scenario, the bad will not be the percentage of taxes, but the cycle of reprisals that can trigger, together with a successive fracture in commercial links among many countries with historical relations. The 25% tariff proposal on Canadian and Mexican imports can devastate the economies of both countries. In addition, the promise of reprisals by the governments of Canada and Mexico would fracture the value chains in a region with a high level of integration. While the 25% tariff for steel and aluminum imports, will increase the production costs of all industries responsible for producing goods from these raw materials, and will increase inflationary pressures both in the United States and in the world.
In such a context, it is essential to remember that every country that initiates an opening process to international trade obtains benefits from its new relationship with the world. It is also true that, if that same country raises barriers to international trade, its economy will be the one that suffers the most. This due to the costs of production, consumption, trade and income that local society must assume for its isolation.
This dilemma, opening-protectionism, has led to the countries of the world to sign trade agreements to limit the ability to introduce protectionist measures that sabotage their true national interests, due to internal political pressures. In other words, the GATT -based trade system and WTO concentrates the rules of the international trade, discriminating discriminatory practices, promotes transparency and predictability, and slows protectionism.
In these moments of uncertainty in the international economy, commercial opening must be seen as an economic need and political security. The first in favor of the global public good, with an open economic system and based on rules, can be recovered and improve the standard of living the world before pandemic. And the second, because the established commercial system, although imperfect, is a better alternative to disorder and panic.
It is time to strengthen the multilateral system, promote cooperation and defend a global economic order based on rules. Only in this way can the temptation to fall into the economic and political chaos that move the world society of high welfare levels be avoided.
@zerpasad
