History shows that “easy” tariff wars are not all that easy. In the current battle between the Trump administration and China, the EU, Mexico, Canada, and others, the conflict has seemed to be about economics such as tariffs. However, the administration has now linked them, in the case of Mexico, to immigration and drug policy and even a salve to farmers hurt by ongoing tariff wars — all in non-specific and seemingly ad hoc terms. But tariffs wars may soon careen into issues of public health.
Specifically, China has signaled that in part in response to President Trump’s trade tactics, it has stopped the process of sharing information concerning Avian flu viruses emanating from its chicken farmers. These viruses travel annually westward, and will again this year, to infect human populations. The most important strain, H7N9, is lethal to 40 percent of the people who contract it.
In a report in the New York Times late in the summer of 2018 (Aug. 27), Emily Baumgartner noted that despite repeated requests, China has not provided samples of H7N9, usually exchanged readily by the World Health Organization (WHO). Unlike shortages in aluminum or rare earth minerals or soybeans, the article cites Dr. Michael Callahan of the Harvard Medical School, who noted that such restrictions on access to new flu strains could counter our ability “to protect against infections which can spread globally within days.” As Andrew C. Weber, who was responsible for biological defense programs in the Obama administration said, “not sharing it immediately with the global network of WHO laboratories like CDC is scandalous. Many could die needlessly if China denies international access to samples.”
While the interface of trade policy and public health is not often mentioned, the impact of trade disputes on the transmission of human illness — both direct and indirect — is noteworthy. While economic disputes over soybeans or aluminum or other goods and services may seem unconnected to dying from the flu, they are not. The Trump administration’s tariff measures, announced by the U.S. against China and more recently in immigration-linked threats against Mexico, have been driven by an extraordinary naiveté about and ignorance of history.
In the early 1930s, the U.S.-imposed Smoot-Hawley tariff led to an escalating series of countermeasures from Europe that deepened and prolonged the Great Depression. It also led to privation in Europe in which Fascism festered, and encouraged, if it did not cause, World War II. Millions of lives were spent. The realization that tariffs played such a role led to a set of rules which reduced net effective rates of protection from close to 50 cents on the dollar after World War II to about 5 cents in the mid-1980s. Since then, however, especially after the successful conclusion of the Uruguay Round of multilateral trade negotiations (MTN) in the early 1990s, the postwar consensus on trade liberalization has broken down, as memories fade and grievances mount.
Despite the World Trade Organization (WTO) agreement, paired with NAFTA in 1992 and 1993, these grievances, especially in the U.S., have created fertile ground for protectionists such as Trump to exploit. It is striking how much of his rhetoric over NAFTA and trade, claiming that American workers have been cheated by globalization, resembles the exhortations to Germans in the 1930s to rise up against their betrayal by the Versailles Treaty and the ill-advised reparations imposed by the Allies after World War I. While NAFTA and other trade agreements have surely encouraged sectoral reallocation and some unemployment, they are not prime movers compared to robotics, informatics and other technological changes.
An invitation to retaliation
Specifically, they fail to appreciate the basic game-theoretic idea that the countries targeted by U.S. tariffs will not sit still and simply take it. In addition, economic theory strongly suggests that tariffs are most effective when you pick on someone smaller (perhaps it’s no coincidence Melania has taken an interest in juvenile bullying, domestically). But to pick on someone nearly your economic equal, like China, is to invite retaliation you may grow to regret. In the case of Mexico, while U.S. threats are credible, the impact of NAFTA, by encouraging growth in the Mexican economy, has actually been to ease the economic motive for migration.
China has shown itself to be both restrained and sophisticated in response to U.S. provocations, targeting commodities for retaliation, especially in the agricultural Midwest, where Trump’s electoral base largely resides. But Chinese retaliation and resentment runs deeper, indicating the profound damages that brusque trade-bullying tactics may incite, to potentially lethal effect if the world’s largest nation turns toward breaking down international collaboration on issues of health security.
One of the great challenges of government policy in this century is understanding the links from politics to science. In this respect, quite apart from Trump’s inability and unwillingness to acknowledge the threats of climate change, the current administration has failed the country. Whoever runs against him in the next election would do well to note that Trump has not only failed to competitively position the U.S. in the world economy, but toward external threats to health security, he has made our defenses weaker.
Carlisle Ford Runge is Distinguished McKnight University Professor of Applied Economics and Law at the University of Minnesota. The views expressed are those of the author and not the University of Minnesota.
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