‘How to Win a Trade War’ Review: The Times of Tariffs

Germany before World War I provoked backlash because of its rise in exports and overproduction, similar to China today.

By Theodore Bunzel. He is the head of Lazard Geopolitical Advisory. He has worked in the political section of the U.S. Embassy in Moscow and at the U.S. Treasury Department. Excerpts:

"“How to Win a Trade War” shows us that, even in the age of Trump, many of today’s trade tensions are a historical rerun. Germany before World War I provoked backlash because of its sharp rise in exports and overproduction, similar to China today. Its cornering of an “extraordinary 90 percent of global production” of chemicals and dyes sparked fears of dependency among the Allies. Even the White House’s coercive Liberation Day tariffs have an echo in history: 1870s France hiked tariffs 24% on its neighbors and demanded they negotiate more favorable trade deals within six months, a gambit that—like Mr. Trump’s—largely succeeded in forcing trade partners to submit to new treaties.

With protectionism becoming more fashionable, Ms. Keynes and Mr. Bown provide a helpful reminder that tariffs are, generally speaking, economically destructive and rarely achieve their stated goals. Such policies impede growth, chill investment and—outside of commodities—are overwhelmingly paid for by the importing country. Even on trade deficits, the authors remind us, tariffs have historically had largely insignificant effects. While the evidence on tariffs and their effects on industrialization is more mixed, for every Japan or South Korea—which used barriers to turbocharge manufacturing in the postwar era—there are the smoldering examples of Brazilian personal computers or Indian autos."