This is an extract from Martin Vander Weyer’s ‘Any Other Business’ column in this week’s Spectator.
‘Stocks plunge as China hits US goods with tariffs,’ said a headline after the long weekend, and the FTSE100 duly dipped below 7,000. But I wonder what a serious trade war would look like — and how markets would respond if the White House and Beijing took the gloves off. Last year, China exported $500 billion worth of goods to the US, while US exports to China amounted to $135 billion. Last month, President Trump announced import tariffs on $50 billion worth of Chinese steel and aluminium, 10 per cent of the total import bill. China has hit back with tariffs on US steel tubes plus an eclectic product list ranging from aluminium scrap to frozen pork liver, adding up to $3 billion — which, to quote Humphrey Bogart, ‘don’t amount to a hill of beans in this crazy world’.
The truth is that Trump’s first move was a shallow bid for adulation from benighted blue-collar supporters — and every wise head in Washington told him it was stupid. China’s response is token tit-for-tat, from a regime that clearly has a more intelligent overview of the benefits of global trade. Collateral losers so far include American farmers and scrap dealers, denizens of Trump’s heartland just as much as the steel workers he claimed to be defending. As for the US stock market, the one factor that should have spooked it in the first place was last year’s coronation of Trump, but during his first 12 months in office, investors showed precisely the opposite reaction; now they are beginning to realise how much damage to their interests he’s capable of causing.