After the American announcements, there is more and more talk of a trade war and the spectra of a return to the protectionism of the 1930s. In fact everyone is in a rather uncomfortable position.

Donald Trump is a “bad guy” when he threatens Europeans, but Europeans are still considering joining him against China’s unfair practices. China, for its part, has threatened to retaliate, but we know that the great loser in a trade war is rather the one who reaps record trade surpluses. As for the criticisms of the WTO and the so-called liberal globalization, they are caught in the traps of a populist leader who himself denounces the myth of free trade and apparently only applies his election promises.

The work of the CEPII research center in Paris allows us to see a little more clearly what is at stake. On the one hand, threats to steel and aluminium are primarily directed at Europeans, not China, and require a strong response from them to save the existing multilateral institutions. Otherwise, the law of the jungle, and therefore of the strongest, is likely to come back in force in international affairs.

On the other hand, an analysis of past experiences with protectionist measures under the Bush (2002) and Obama (2009) administrations shows that:

– Direct and indirect jobs would have gained nothing, quite the contrary;

– American consumers have finally paid more for their products;

– The only winner, finally, has always been the shares of American companies that benefited from protectionism.

The explanation of Jean-François Boittin, one of the best French experts on the subject, based in Washington, is unambiguous: the trumpian rhetoric of calling into question all past agreements and the impossibility of settling disputes through WTO litigation procedures would be more closely linked to the integration of trade issues into the American strategic stance at large, which increasingly openly identifies Russia and China as the two priority adversaries of the United States. Hence, no doubt, the rapid change of tone on its Canadian, Mexican or European allies.

If this is the case, one may indeed fear the unintentional triggering of a spiral of commercial conflicts by the classic sequence of a retaliation cycle fueled by Trump’s incoherence and in particular two perverse economic effects for American citizens themselves. On the one hand, the tax reform announced by Trump should actually increase public deficits and thus trade deficits. On the other hand, the rise in inflation due to higher domestic prices should accelerate the rise in Fed interest rates and thus precipitate the reversal of the American economic cycle as we already feel it on track.

In total, two lessons emerge:

1- Yes, undeniably, the rules of free trade organized under the aegis of the WTO do not marry well with the evolution of Chinese capitalism 3.0 of President Xi Jinping which notably tightens the control of the State in all fields.

2- No, the American approach of a strategic confrontation using commercial weapons certainly does not allow the necessary corrections to be made to an international system that has never managed to balance commercial objectives with those of full employment and respect for the environment.

The triangle of balanced and probably moderate globalisation called for by the economist Dani Rodrik, for example, still remains on the working table of the nations, including India