2019-05-21

Trade War Makes New Winners and Losers

Caixin: Tariffs ‘Catastrophic,’ Footwear Giants Tell Trump
Nike Inc., Adidas AG and other footwear giants urged U.S. President Donald Trump to reconsider his tariffs on shoes made in China, saying the policy would be “catastrophic for our consumers, our companies and the American economy as a whole.”
If shoe prices go up and people are inelastic in their shoe demand, the higher price boosts retail sales in the U.S. If some shoe production moves back to the U.S., GDP gets a boost. If consumers don't buy as many shoes and consume other American made goods and services, the economy gets a boost. If instead they buy shoes from Vietnam, there's no major impact on the U.S. economy.

There are winners and losers in the trade war, as there were losers and winners from the expansion of trade. Globalization is in retreat, the future is trade blocs and/or increased local production. This letter from the shoe companies is akin to a strike by American steelworkers or autoworkers in the 1970s.

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