Paul Krugman, Nobel Laureate economist, NYT op-ed columnist, & author answered.
Trade policy is a funny area: I think people tend to overstate its importance, partly because it sounds important, partly because free trade plays such an important role in the history of economic thought.
So, some perspective: America and China are both very big economies, and trade between them isn’t that big as a share of GDP. So you don’t want to get apocalyptic about the trade war.
Still, it’s disruptive. A lot of businesses have made investments, hired people, based on the expectation of stable trading relationships. When you shake those up, some bad things happen – like farmers sitting on piles of rotting soybeans because China has stopped buying. Most people will barely notice the effects of the trade war, but a few people will be hard hit.
Trade policy is a funny area: I think people tend to overstate its importance, partly because it sounds important, partly because free trade plays such an important role in the history of economic thought.
So, some perspective: America and China are both very big economies, and trade between them isn’t that big as a share of GDP. So you don’t want to get apocalyptic about the trade war.
Still, it’s disruptive. A lot of businesses have made investments, hired people, based on the expectation of stable trading relationships. When you shake those up, some bad things happen – like farmers sitting on piles of rotting soybeans because China has stopped buying. Most people will barely notice the effects of the trade war, but a few people will be hard hit.
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