UPDATE—3:30 pm: On Tuesday the White House stated that US negotiators had secured some changes in its existing trade agreement with South Korea, with more specifics forthcoming; this was hailed by Trump supporters as a significant victory. The biggest reported gain was that the quota on US auto-company exports to South Korea will be expanded from 25,000 to 50,000—however, since no US manufacturer sold more than 11,000 cars in South Korea in the past year, it’s not clear that this would do anything to create US jobs, especially since the cars in question could be manufactured by US companies anywhere in the world.
On the positive side, it doesn’t look like the United States will have a trade war with South Korea any time soon. Especially since South Korea is probably a lot more worried about Trump’s starting a devastating real (and potentially nuclear) war with North Korea.
Talk of trade wars and falling skies has taken up much space in the media since Donald Trump first announced tariffs on imported steel and aluminum on March 1. But such fears are highly exaggerated, which should not be surprising in a country where the benefits of a succession of misnamed “free trade” agreements have been grossly exaggerated for decades.
Within weeks of announcing the tariffs, the administration had already exempted most of the major suppliers of steel and aluminum to the United States—including the European Union, Brazil, Argentina, South Korea, and Australia, along with Canada and Mexico.
China’s retaliation was minuscule: It announced tariffs on just $3 billion in US goods, or 0.13 percent of American exports. The Chinese, like most of the world, know that Trump’s recent actions don’t really represent the long-term trade policy of the United States. That policy is generally made by corporations, working through the best Congress that money can buy. It’s true that Trump contributed to the collapse of the proposed Trans-Pacific Partnership agreement. But its defeat was more the result of a quarter-century of organizing and public education, including by environmental, labor, public-health, and other public-interest groups—not to mention the strong public opposition to it expressed in the fact that TPP opponent Bernie Sanders took 46 percent of the Democratic primary vote. America had reached the point where even longtime supporters of the agreement such as Hillary Clinton were forced to renounce it. (And speaking of long-term US trade policy, it’s worth noting that Trump has since talked about possibly joining the TPP after all, once again displaying the shallowness of his convictions.)
The collapse of the TPP was a remarkable democratic achievement—and rare as a unicorn in US political history: An agreement that every powerful corporate interest as well as the “national-security state” wanted very badly was defeated by mass pressure on US legislators and political candidates. But the prospect of a “trade war” is another story.
As far as foreign governments and corporations are concerned, it doesn’t make sense to get into a trade war, or any kind of fight that could cause economic damage, with someone like Trump, who is isolated from his own country’s elite. The leaders of America’s biggest trading partners, including Europe and China, are likely smart enough to wait for Trump to finish his stay in the White House or move on to his next distraction, whichever comes first.