Several countries around the world are gearing up for a massive trade war with the United States, some of those countries being China, Mexico, and Europe. Mexico initiated the utter beginnings of a trade war with the US over sugar by canceling exports, Europe and China are also steadily preparing for a collision with the USA over potential tariffs.

The Sueddeutsche, Germany’s largest newspaper recently published a report citing the methodology of Europe’s preparations for the coming Trade War. The following is from the German paper and has been translated;

It is not yet clear what Chancellor Angela Merkel and American President Donald Trump, as well as Federal Finance Minister Wolfgang Schäuble and US colleague Steven Mnuchin will be talking about when they meet in Washington and Berlin next week. What is certain, however, is that, from a German perspective, the talks are also about diplomatically persuading the US government to refrain from import taxes on foreign companies. However, because President Trump’s reaction is not really predictable, Europeans are preparing for an emergency – how they could react if they have to pay up to 20 percent import tax on their products at the US border. Trump has always announced this.

According to the report, national, multilateral and European measures are being considered to counter the US. China, on the other hand, stands to potentially gain from a US trade war, because if the USA adds tariffs on imports and exports, then far too many countries could look East for answers.

Mexico, having already begun measures within the trade war has banned the export of sugar, preparing its arsenal. The cancellations on sugar marked the latest dispute of years-long trade row between Mexico – the U.S.’ top foreign supplier of sugar – and the United States at a time when cane refiners are struggling with prices and tight supplies, U.S. industry sources said. The next item on Mexico’s list is corn, some in the Mexican Senate are willing to start a “tortilla war” with American farmers and with government officials in Mexico City supposedly planning to introduce legislation that would tax corn imports from the United States.

China, on the other hand, states that depending on how Trump plays ‘his hand;’ “There are flowers around the gate of China’s Ministry of Commerce, but there are also big sticks hidden inside the door — they both await Americans.”

Meanwhile in the USA, from the White House website, Trump’s official agenda states:

For too long, Americans have been forced to accept trade deals that put the interests of insiders and the Washington elite over the hard-working men and women of this country. As a result, blue-collar towns and cities have watched their factories close and good-paying jobs move overseas, while Americans face a mounting trade deficit and a devastated manufacturing base.

With a lifetime of negotiating experience, the President understands how critical it is to put American workers and businesses first when it comes to trade. With tough and fair agreements, international trade can be used to grow our economy, return millions of jobs to America’s shores, and revitalize our nation’s suffering communities.

This strategy starts by withdrawing from the Trans-Pacific Partnership and making certain that any new trade deals are in the interests of American workers. President Trump is committed to renegotiating NAFTA. If our partners refuse a renegotiation that gives American workers a fair deal, then the President will give notice of the United States’ intent to withdraw from NAFTA.

In addition to rejecting and reworking failed trade deals, the United States will crack down on those nations that violate trade agreements and harm American workers in the process. The President will direct the Commerce Secretary to identify all trade violations and to use every tool at the federal government’s disposal to end these abuses.

To carry out his strategy, the President is appointing the toughest and smartest to his trade team, ensuring that Americans have the best negotiators possible. For too long, trade deals have been negotiated by, and for, members of the Washington establishment. President Trump will ensure that on his watch, trade policies will be implemented by and for the people, and will put America first.

By fighting for fair but tough trade deals, we can bring jobs back to America’s shores, increase wages, and support U.S. manufacturing.

Trump is dead on, for far too long Americans have been put last when it comes to geopolitics, all while other countries reap the benefits. However, depending on how Washington plays it’s hand the world could witness the extravagant consequences of an all-out trade war.

Historically, whether a trade war caused the Great Depression or not is still up for debate.

The Tariff Act of 1930 (aka the Smoot-Hawley Tariff Act), started out as a bill that would only raise tariffs on some agricultural products, but a host of other special interests piled on and before the legislation finally reached President Hoover’s desk it represented one of the largest tariff increases in U.S. history.

On June 16, 1930 when the Smoot-Hawley bill was signed into law the broad economy was just starting to slip into the Great Depression. Two years later unemployment had reached almost 24 percent in the U.S., more than 5000 banks had failed, and hundreds of thousands were homeless and living in shanty towns called “Hoovervilles”. Our economic woes spread around the world, although other countries weren’t hit as hard; while our unemployment rate increased some 600%, unemployment in Great Britain rose some 130% and over 200% in France and Germany.

Did the Smoot-Hawley tariff act cause the Great Depression? Let’s look first at some other possible causes often cited by economists.

One possible cause, of course, is the stock market crash that had begun in the last week of October 1929, some eight months before Hoover signed the Smoot-Hawley tariff. The Dow had plummeted from 326 on October 22 to 230 in the next six trading days and it finally settled at a low of 41 in July 1932.

Whether or not the USA is ready for an all-out trade war, one is brewing and has been for some time, but are we ready for a trade war with the rest of the world?

Works Cited

Cerstin Gammelin. “How Europe is preparing for a trade war with the USA.” sueddeutsche. . (2017): . .

Kenneth Rapoza. “Food Fight: Mexico Targets American Corn In Trump 'Trade War'.” Forbes. . (2017): . .

Eduardo Porter. “Mexico’s Potential Weapons if Trump Declares War on Nafta.” NYTimes. . (2017): . .

Sharon Marris. “Mexico threatens trade war over Donald Trump's wall tax.” Sky News. . (2017): . .

Tyler Durden. “China Prepares For Trade War With Trump.” Zerohedge. . (2017): . .

Reuters. “Exclusive: Mexico cancels sugar export permits to U.S. in trade dispute.” Yahoo. . (2017): . .

Bill Krist. “Did the Smoot-Hawley Tariff Cause the Great Depression?” Americas Trade Policy . . (2014): . .

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