This Policy Contribution analyses the economic consequences of a full-scale trade war. The US position, focusing on bilateral trade imbalances presumably resulting from unbalanced trade policies, is seriously threatening the multilateral trading system. The authors estimate the impact would be damaging for everyone. Though the EU is partly protected by the size of its internal market, it must engage resolutely in a strategy of defence of trade multilateralism.
Since Donald Trump took office as US president, a new cottage industry in rational theories of his seemingly irrational behavior has developed. On one issue, however, no amount of theorizing has made sense of Trump: his treatment of America's oldest and most reliable ally.