Tariff escalation

This looks like an escalation of war, but based on import tariffs.

The United States imposes 25% tariffs on their products, and Canada responds with another 25% on US products, especially on steel, tools, and sporting equipment. Trump sets a 10% tariff on Chinese products, and they respond with 15% on chicken, corn, wheat, cotton, soybeans, and dairy products. The United States imposes a 25% tariff on steel and a 10% tariff on aluminum on Europe, and the EU responds with 50% tariffs on bourbon and other iconic products like Levi's jeans and Harley-Davidson motorcycles. Outraged, Trump has threatened 200% tariffs on wine, champagne, and other alcoholic beverages. War.

Well, I'd like to explain my point of view. Much ado about nothing. Fireworks. This isn't going anywhere. Why? Because the United States will find that if China, the European Union, Canada, Mexico, and Japan—major global economies—trade with each other without tariffs, they'll be the only ones left out. This is like when, as a child, in the schoolyard, you threatened not to play soccer if you weren't given the striker spot. If that meant there wasn't a game, the others would give in. But if there were other children to play with, you were the one left in the corner bored, and you learned an essential concept for life and economics: bargaining power depends on the alternatives available to the other side.

The United States is imposing unilateral tariffs, by product and country, on territories that will continue to trade with each other. If they want to stay out of the game, let them. But the rest of us will continue playing football, and sooner or later, they'll realize that staying out of the game makes them poorer.

A tariff policy is not the same in the 19th century as it is in the 21st century. World trade oscillates between 50% and 60% of the planet's total GDP. The United States represents 11% of all world trade. If it doesn't play along or imposes unacceptable rules of the game, the rest of us will be able to continue without it. And with an advantage because we will have greater volume to trade. The EU represents 15% of world trade, more than the United States. And while they represent a significant portion of our exports, we will sell to other countries what they are buying from the Americans.

This escalation, in a globalized world, will not last long.