From the New York Times are Michael Barbara they did it in mounting tariffs on foreign, steel and aluminum, President Trump said they would protect national security. But what is the threat to national security? Are the terrorists themselves it's Thursday March Peter when's, the last time that we were in a big trade war, the nineteen thirty, that's the classic case of trade conflict yielding catastrophe. Peter Goodman covers economics for the times from roughly eighteen, seventy till the first World war. That's a period that economic historians

Are you, sir? First wave of globalization, where there's a lot of trade, a lot of development of new markets and the world's being knitting together in a way in which it had not been previously and World war. One on did that and produced a lot of nationalism, distrust economic insecurity and all of this lives on through the first decade of the twentieth century, where you have this retreat to protectionism, to countries putting tariffs and other sorts of restraints on trade to protect their domestic industries. And the crescendo of this is this. Nineteen thirties law, adopted by a Republican, controlled Congress, called the smooth

Polly Tariff, backed up by men who opining grip the world which comes as the? U S is sinking into the great depression bottom regarding the interminable line outside back rigging, desperately robbing broad job that rarely comes. It means hunger in March, we unemployed and the nations and the Republicans in Congress resort to protectionism as the facts. They Jakob tariffs on hundreds of products, two levels that had not been seen in a century- and this is supposed to you- know puddle- all around american factories and farmers and protect them from the incursions of foreign competitors, but the results are immediately disastrous on price. Have dropped disastrously. A man's work no longer brings and adjust window, but bread of foreclosure of using house and home spread through the council but a bomb lands and radical talk is

oiling into action. America's trading partners in Europe in Latin America start imposing their own tariffs. So suddenly american farmers who are supposed to be protected now can't export their wares to other markets around the world and the economy, which is already in the depression sinks deeper into the pressure, is certainly not the cause of the great depression, but it is widely seen as it caused exacerbated, deepened lengthened. The great depression and trade grinds to a halt really, and around much of the planet. So even though these tariffs, the Smith Holly Tariffs, were meant to be defensive, measures to protect the United States economy and

Industries, it sounds like it ends up being often says and very provocative. Well, it certainly has that a fact I mean when you impede imports from another country. You are effectively hurting the livelihood of the people in that country who make their living selling stuff to you and they're, not real happy about that and domestic politics in other countries. Then man similar retaliation people are angry and accusatory, and now it suddenly just about every country. I mean Great Britain, France, Nazi Germany, respond to these american tariffs with their own tariffs. That's what the effect of the Smoot Hawley Tariff but we had. We had tit for tat terrible gaudy tomorrow, but Equally overnight and economic blizzard swept the world in Japan, France, Britain

always the unemployed kitchens. Poverty and despair should other fewer opportunities for everyone and, as a result, european nations that are already feeling tremendous hostility and insecurity towards one another have a new reason to feel that way. I mean it enhances the nationalistic animosities that have been unleashed across the there's a blame game and it's easy to go and blame the people on the other side of the border for effectively damaging here, you're living and it is certainly a contributor to what becomes world war. Two so in this case, a trade war actually is a factor in a real or it is certainly a factor. So does the? U S and the rest of the world absorb that lesson after all, war to yeah,

very much ITALY in Washington is again the nations Papa. Why does the eighty of Congress convenes during one of the most crucial periods and the nations history? The capital awaits arrival of President Truman to deliver his message so power. That emerge victorious from world war. Two and the United States is, at the top of the list, build this new economic order world economic cooperation is essential. The world political cooperation and the fundamental idea is dead if people are tied by commercial interests, if their trade, with one another if their engaging in commerce together than they are less likely to develop murderous impulses to one another? We must now take others, then, for the reconstruction of world trade, and we should

can you just drive for an international trade system as free from obstructions as possible? This idea is at the centre of The global trading order that emerged from the war first with the so called Gatt. The general agreement on tariffs and trade, which starts up in the mid forties, and that gives way in the mid 90s to the World Trade Organization, which is often described as the kind of referee for global trade. So there are agreed upon. Rules are now one hundred and sixty four members and operates by consensus. Everybody agrees to extend a deal to one world Trade organization member. If you lower your tariff on some product that you have stand that same deal to all the others and if their dispute, and then you have this institution that that adjudicate and looked at the rule?

well, then, and proposes remedies in it. It's all about settling disputes before there is a war, so after trade had contributed to a world war at something A driving idea behind this global trade agreement was that the opposite of that could also be true that having friendly productive trade relationships could actually preserve peace. Exactly wrote that the connected Miss through trade would be. Mendous disincentive against war, because war would then be disrupting something that depends upon peace to continue. That's the fundamental idea so has the global trade agreement and the deputy o worked in terms of preventing the kind of devastating trade complex that we see

in nineteen thirties yeah. It has, but there have been some flare up some hidden in the early eighties. Japanese production of automobiles is almost twice as great per worker as it is in America, we did come pretty close to a trade war between the United States and Japan. Japanese steelworkers out produce their american counterparts by about twenty five percent. When Reagan took on the Japanese over surging exports of car to the? U s now, this isn't because they are better workers, I'll match the American Working Man or woman against anyone in the world. So what happened with Reagan end the auto industry and Japan. In the nineties.

The Reagan, comes into office in January, one, the american auto industry, is in a generally pretty rough shape. New cars and used cars stand like shining tombstones in the showrooms and parking lots of the nation's car dealers, unloved, unwanted and unsold this seven. These was the time of oil shocks, gases really expensive. People can no longer afford to run cause that do twelve miles to the Ganem and Americans have now acquired haste for later, smaller, more fuel, efficient cars and Detroit just isn't producing them. Toyota, that's country comments, any small Rostov window. You be asking, but our Yoda Foreign and we'll Japan has stepped in and is suddenly flooding the United States with fuel efficient cars. Americans are buying them up in their landing in drivers,

whilst the United States and enjoy the highest owner loyalty among all leading import guys- and you can put a price on Lord Reagan's under pressure from the auto industry, to give them some breathing room so that prompted Reagan to jawbone the Japanese and to threaten to perhaps then ultimately landed on on some other products as well, but the concentration on cars resulted in Japan to voluntarily restrain own exports to live voluntarily, heart voluntarily yeah. So how was it in this? is that we avoided a big trade war with Japan. Why did Japan basically agreed to do what Reagan asked well, in this case, both sides have a lot of interest and avoiding a trade war. The? U S is got military bases in Japan is pledged to defend Japan and event of attack and there's just no scenario where Japan's

have sustained hostilities with the United States and for Reagan, any Reagan fancies himself, a free trader, he doesn't want to have a trade war he's he doesn't want to have a breach with the World Trade Organization he doesn't want. Be seen as as unilaterally disrespecting the rules of global trade. So both sides find this finesse. I so called protect. This is almost always self destructive doing harm than good, even those it's supposed to be helping advocates of protectionism, often ignore its huge hidden costs, but far outweigh any temporary benefits, So this is an example of these global trade wars and global trade institutions working. This is an example of yes, the rules based global trading system working and also the pragmatic interests of business and consumers, which generally carry

day over the kind of screaming of protection of the European Union, has not treated as well, and it's been a very, very unfair trade situation. I'm here to protect, and one of the reasons I was elected as on protecting workers on protecting our companies and I'm not gonna. Let that happen trumps trade advisers. Often point to the nineteen eighty example with Japan and cited Evidence that if you stick out a tough position, if you sell people on the idea that you are willing to go to war, then that can be a fruitful prelude to negotiations. They get you what you want, but the situation today is quite different from the situation in the nineteen AIDS will be right back.

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the global economy industry, this way too much still being produced regard governments around the world subsidizing steel production. There is a large glut of steel world markets and a lot of its common atta, China. The? U S and the European Union playing China has been dumping steel products onto the global market, which has heard their own steel makers, Steel makers continue to fight a losing battle against foreign steel, China, the global steel making giant makes worse than all other countries by cells for less than a first class here to make. The issue here is that these tariffs that the Trump Administration is outlined would hit not China, which sells only about two percent of the steel to the United States that concern the United States, but every other american trading partner that sell steel. Can

which is the number one supplier, South Korea, Japan, Taiwan, Germany, Mexico. These are countries that view themselves as key american allies that are committed to the rules based global trading system that are suddenly being hit by the impacts of these tariffs, so the mass that you just laid out is pretty remarkable. Present Trump says that these tariffs are about cheap chinese steel, but we only got about two percent of our steel from China: Actually, these tariffs are mostly hitting the other countries that we get our steel from including many of our allies, but does this at least solve a problem? For? U S, manufacturers! The idea is that you help Americans Jill producers who are operating in a global climate where there's all this surplus chinese steal that bring down prices and making a very

if all for them to be profitable and certainly to steel industries, lost a lot of workers or a lotta laid on the workers in the industrial, MID West and the steel producers themselves are happy about these tariffs. The problem is that in the american economy, there's something like eighty times as many people who wake up and go to work at companies that by steel, as there are workers who go to places that makes deal. So when you help the steel companies shore up their profits by protecting them from overseas competition, you ve hurt everybody who depends upon buying steel. Many automakers have to pay if these tariffs happen there companies that make farm equipment, construction equipment somebody's are really big. Companies like caterpillar that are selling their wares around the world, they're gonna have to pay more for steel, so there would

they be potentially more american workers negatively affected by these tariffs, then helped by Olaf. Because more people out of work in companies dead, you steal that would be more expensive as a result of this than people who would benefit because they work in domestic steel production. This is precisely why much of the american business world is up in arms about these tariff, while our biggest complaint really. Is that tariffs, our taxes, for the beer industry potentially three hundred and forty seven million dollars a year in taxes. I'm very concerned there is significant risk here. These tariffs will raise prices on american consumers of cod, In short, there are actually built in America and its not just increase prices and in disruption to the supply chain, but the fear

of retaliation. That's already been stated by foreign leaders around the globe. This is, in fact, the main stream view among economists and businesses that you're helping one industry at the expense of everyone who depends upon buying the goods that that industry produces. This is why Jerry Cone, the president's chief economic adviser, walked out the door having failed to carry the day with this argument that the economy would be hurt by these tariffs. So then, what exactly is the president's justification for in this. The justification for these tariffs from the Trump administration I mean we needed for defense, we need great steel, like is that imports of steel, aluminium, constitute in national security threat to the United States, since the idea that Americans are not as safe as they would be, because we're biased you're an aluminum from Canada. So is the President saying Peter that in the event of war, we would need plenty of,

your plenty of aluminum, presumably for weapons for ships for plans and we need It sure to protect our own domestic manufacturing of those materials ins of relying on another country for those metals. Is that basically the argument? Yes implicit? Is this idea that there's some sacred about steel and aluminum, and if we're not in control of, if you don't have our own supply of it at home, then we're in peril. But, let's remember something like two thirds of the steel that we are consuming in the United States is produced in the United it's. It's a! U S generates two thirds of the steel it we consume. How could there be a national security threat of us suddenly not being able to produce enough of our own steel. Well, if Mr Trump goes through with this plan, that your question that some judges in Geneva at the World Trade Organisation will probably be wrestling with

So this could actually end up in that global rules system that you ve been describing. Well, they should stay It responds to the announcement by President Donald Trump The European Union has signalled that it's likely to challenge these tariffs as illegal under diabetes, stand ready to respond swiftly, family in a proportionate manner, on the basis and as required by the habitual rules? Now that present something of an existential crisis to the world trade order patient, because the old into the World Trade Organisation is a lot of deference to sovereign nation. And they may be tempted to say We may or may not agree with this rationale, but the United States is sovereign. Nation has the right to determine for itself when it

national security is on the line if they rule that way. The result of that will be to blow a giant hole in the rules based global trading system, because that would presumably open the floodgates to lots of other assertions from other countries that are looking for an opportunity to protect favoured industry. On the other hand, if the invalidity these trump terrorists, if they say no we're not buying it. There is no real national security claim here back and prompt the tromp administration, which has been openly hostile to the World Trade Organisation, to others, disregard the referee and lead the game go on, in which case they will have undermined the power of world trade Organization or to just pull out altogether, then we'd be an uncharted territory.

So you're saying that this proposal by President Trump has the potential to really throw the global trading system in two crisis. Corrupt, so power of other countries responded to the threat of these two son. Aluminium is still. There is provision, a list being being discussed. It will now be shared with member states. European Union has already signalled that if these tariffs happen, they're gonna put retaliatory tariffs on a bunch of sensitive american products. I would say that on the least ass steel products, that industrial products and their agricultural products and under certain types of that in is indeed on the list, a burden which is produced overwhelmingly in Kentucky words than at present in MID Mcconnell pangs, his hat Harley Davidson motorcycles, which come from the state. It was constant home of house, bigger, Paul Ryan and other sensitive products

Donald Trump decision to impose tariffs on steel and aluminium imports has fuelled is of an escalating trade war, Canada, Mexico, China, Australia, Brazil and the European Union are all threatening retaliatory measures against you. Product. So we regard the imposition of any new tariffs. Ready tariffs on steel. Aluminium between two countries is absolutely unacceptable. React firmly and common Fourthly, to defend our interests, were no longer talking about individual industries or no longer talk about protecting strategic industries, we're talking about using trade to inflict harm across borders. So if these tariffs, the president is threatening on aluminum and steel if they dont really address a national security threat and if they wouldn't actually do

that much to change the global trading math around steel and aluminium, and if it really does Canada setting our allies and provoking Alvis retaliation. Is there some other reason why President Trump is doing this? We are going to put american steel and aluminium back in through the backbone of our country. These tell a low fill a very prominent campaign, pledge that this president ran on we're going to put the miners at this steel workers back to work and allow him to go be greeted warmly by steelworkers. I mean in places like Indiana Illinois and one of the hardest hit, as then the state of I'll manage

Factoring jobs, your steel jobs, Ohio, Michigan, Pennsylvania, and when I present, I guess what steel is coming back to Pittsburgh at a lot of other things coming where steel workers Have seen really really awful? Unemployment have lost homes of law. Savings me. This is a way of saying I feel your pain folks outrages

Much about it, it's to be so easy man, I've done something about it and you talk to trade export and they see it as a sort of cynical ploy where you're effectively damaging the economic interests of more working people in exchange for that photo on. But the power of that photo Photoshop is an opportunity for this president, who is very good at speaking directly to his base to wave a victory flag wall. A bunch of nerdy economists run around screaming. Actually it's a lot more complicated than that, and it seems to be a bad that those people will be drowned out by the sheer power of that imagery of steel mills hiring people too. This is about domestic politics, but it sounds like there are very real and potentially very destructive consequences of these tests,

ass to the american economy, to american workers and to our relationships with countries around the world. Yet exactly right, Peter, the President is invoking national security, as we discussed in trying to justify these terrorists, but do you think these tariffs actually threaten national security? I mean, if you believe that bored and for the United States to have the trust of its allies. Then there is an argument to be made that this jeopardizes national security and he looked out of the courage of the Second World war. Came this idea daddy far, commercial interests are linked if we're trading with one another. There were less likely to take up arms against one another and go to war, and the United States

Follow me on earth is now run by a president who does not seem to believe in that basic idea. That is a direct challenge to the collectivist notion that has driven not only trade policy but diplomacy in the post, cold war to era, and it's coming in for a stiff test, and one could argue that that is a threat to american nationals journey. Peter. Thank you. Thank you very much. My on Wednesday, the European Union announced the tariffs it plans to place on american meat products in.

Television for the? U S: terrors, including bed, linens chewing tobacco cranberries an orange juice. Despite those threats, the times reports that President Tromp is expected to sign the terrace later today, here's what else you need to another day, the times reports that President Trump has attempted to us: with the witnesses in the special councils. Russia investigation about what they told investigators. In one case, Trump asked his former chief of staff runs previous what he said to the investigators. In another case, the President asked a White House lawyer Don, began to publicly deny or report in the times that Mcgann, hold investigators that tromp asked him to fire the special council again now. Issued such a denial, the

Counters could open a new line of inquiry for the special council about whether the President's sought to tamper with witness testimony that it further. Due on Michael Bobby Seale,. Do you avoid tough problems and shy away from a debate? Do you think uncertainty limits potential? Neither do we have a university of Chicago Booth, school of business. We believe in asking questions and questioning answers with campuses in Chicago London and Hong Kong. The booth NBA is for people who see challenges. Opportunities and what the skills to make positive change in any market anywhere in the world, ready to find your community search Chicago booth, dot. Eddie, you today to learn more