Trade War and Its Implications: the Beginning of the End for WTO?

The measures announced and partly implemented by the USA to protect its economy, and not least the introduction of additional tariffs, have fatal implications for the global trading system. The USA is on track to suspend the rules that have governed the global economy to date and to start a trade war. The USA is also effectively withdrawing its support from the World Trade Organisation (WTO). Is the WTO threatened by its demise? Martin Braml and Gabriel Felbermayr, ifo Institute, assume that the US government has no interest in the WTO collapsing. It is presumably seeking to create scope for negotiations with threatening gestures. Resolving this muddled situation for the WTO would call for global zero options that no longer permit any exceptions. If these zero options affect tariffs, market access restrictions, anti-dumping measures and the protection of intellectual property, this would be both painful and beneficial for all concerned. Wolfgang Weiß, German University for Administrative Science at Speyer, believes that US unilateralism is destroying the basis of international rules. Overall, the USA’s actions bear witness to an attitude that shakes the foundations of the WTO as the enforcer of a set of multilateral rules. Fritz Breuss, WU Wien, summarises the strategy currently being pursued by the USA in three moves: pressure, cooperation and/or trade war. The EU in particular, but China too, should not give into pressure from the USA. According to Christoph Scherrer, University of Kassel, the WTO is not threatened with demise. In view of US industry lobbies and their political influence, a trade war of greater magnitude is not on the cards, but economic bodies will grow stronger than their political counterparts. Christoph Herrmann and Caroline Glöckle, University of Passau, show that the USA’s current behaviour, as well as the different reactions to it from its trade partners, is throwing up complex and largely nebulous legal questions in world trade. Benjamin Jung, University of Hohenheim, outlines the conditions under which a trade war can be won and its implications for Europe’s position. According to his calculations, the USA can only win a trade war if the rest of the world pursues different strategies and does not present a united front. For Tim Krieger and Laura Renner, University of Freiburg, the Trump Administration is overlooking the fact that protective tariffs usually tend to negatively impact the country that introduces them first, as they do not lead to more efficient competition. For Bernd Lange, European Parliament, Trump sees the World Trade Organisation as a disruptive factor that restricts the USA’s scope for action.