Trade Deal ‘Losers’ Have Economics on Their Side
The European Union and Japan should take heart: The advantages of “defeat” in trade policy are often underrated.
So the last will be first, and the first will be last.
Photographer: Brendan Smialowski/AFP/Getty Images
Mercantilism — essentially the idea that exports are good and imports bad — is the most miraculously tenacious fallacy in economics. Many politicians accept it as true, but even those who understand that it’s a fallacy find themselves playing by its rules. The mercantilist manual says that the Trump administration has scored huge wins in its tariff confrontation with US trading partners, and the partners appear to agree. Their “defeat” has left them humiliated and unable to explain what they did. They might not know it, but what they did was smart.
In trade policy, “defeat” is often underrated.