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  • Image symbolizing the trade war between the U.S. and China.

    Image symbolizing the trade war between the U.S. and China. | Photo: Twitter/ @mobileworldlive

Published 19 October 2020
Opinion

The trade deficit is the consequence of the U.S. citizens having that "extraordinary privilege called 'dollar', which allows them to live on credit behind the world's back," Pascal Lamy recalled.

The World Trade Organization (WTO) former Director Pascal Lamy said that President Donald Trump’s trade policy is “stupid” and “failed”.

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"The results are negative on all fronts," Lamy stressed and explained that the starting point for his policy decisions is wrong.

"The goal was to reduce the trade deficit, which is a stupid idea since the U.S. deficit is explained by the fact that Americans save little and consume a lot. In addition, they have that extraordinary privilege called ‘dollar’, which allows them to live on credit behind the world's back."

"On the other hand, he has lowered taxes a lot and stimulated consumption and imports. The result: the deficit is at US$800 billion. It has never been so high since 2008," he said.

According to Lamy, the failure of the U.S. trade policy is also related to miscalculations regarding China as Trump considered that the Chinese case was a bilateral issue. Therefore, he did not allow Europeans to take part in the dialogues and believed that China should trade less in the world.

Several international economists assert that the U.S. economy has been the victim of Trump's trade war against China and estimate that consumers will be the ones who pay the cost of his policies.

“Trump’s trade policy has brought few tangible benefits to the U.S. economy while undermining the multilateral trading system, destabilizing alliances with U.S. trading partners and creating a climate of unprecedented uncertainty,” Cornell University professor Eswar Prasad said, as reported by The Canadian News.

Although tariff increases have protected U.S. producers in the short run, they have also increased production costs in the industry and revealed “America’s dependence on Chinese suppliers,” Paris-Dauphine University professor according to Gianluca Orefice said.

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