Trade war and free trade

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A trade war is a situation in which countries try to damage each other’s trade, typically by the imposition of tariffs or quota restrictions. This situation is now looming between the USA and China following threats of the President to increase tariffs on steel and aluminium. According to President Trump, such this war is easy to win. We will see. To begin with here follow some of the news headlines, following the imposition of the tariffs:
“Equities in Europe are expected to open significantly lower on Friday as investors see higher risks of a global trade war.”
“The FTSE 100 is seen down by 66 points at 6,881; the CAC 40 is set to be off by 72 points at 5,082; and the DAX 40 is expected to open lower by 189 points at 11,892; according to IG.”
“Asian equities slumped after Chinese authorities said they could hit 128 U.S. products with tariffs in response to the announcement from President Donald Trump that up to $60 billion worth of Chinese products will face new import taxes.” It seems the war has begun, at least a war of words, hence the fear and the nervousness of the stock markets. It also seems that all consequences of beginning this trade war are not fully overseen yet. Thousands of workers and producers in the USA may in fact lose their jobs or their exports instead and be on the losing side rather than on the winning side. President Trump’s WIN-LOSE strategy may and up in a LOSE-LOSE for all.
The “America first” slogan represents the WIN-LOSE concept very well. A WIN-LOSE person is strong and self-centred. (S)he has the courage to express his or her own convictions but is not very considerate of the opinion of others. Most people have been raised in this mentality from birth, in the family, at school, in sports, at work. Children, students, workers have been and are constantly being compared with others and are encouraged to be nicer, better, stronger than others. As a result, they will be loved and appreciated more than others. At home, a child may feel less loved than a brother or sister. At school a student gets better results than others. At the office workers compete for a promotion. In WIN-LOSE, we think “If I win, you lose.” “I get my way, you don’t get yours.” In this frame of mind, people often use position, power, credentials, possessions or personality to get their way. Many people are deeply inscripted in what Stephen Covey calls the Scarcity Mentality. People with this mentality think that there is only so much out there and if someone else were to get a big piece out of the pie, there is less remaining for the rest. These people have a difficult time, sharing recognition, credit, power or profit, even with those who help making it. We often see this mentality in Ethiopia as well. People have a very hard time being genuinely happy for the success of other people, even and sometimes especially, members of their own family or close friends and associates. It is as if something is taken away from them when someone else receives special recognition or is becoming successful. Although they might verbally express happiness for the success of others, deep inside they are jealous and unhappy. They compare themselves with that other person, who they feel is winning and thus they are losing. Such people covet what others have and look forward to the time things will go less well for the other. They are always comparing and competing and spend their energy and resources on possessing things or other people to increase their sense of worth. They surround themselves with people who will not challenge them and who are weaker. They win, others lose.   WIN-LOSE is really LOSE-LOSE in the long run.
Things can really be different if we seek mutual benefit instead. If we are able, to think WIN-WIN, agreements and deals are beneficial to all parties. They feel good about it and make it work. Thinking WIN-WIN is being co-operative, not competitive. WIN-WIN is not your way or my way; it is a better way. An essential character trait for Win/Win is the abundance mentality as opposed to the scarcity mentality that we looked at earlier. The abundance mentality is a paradigm that means: there is plenty for everybody.
It results in sharing of prestige, of recognition, of profits, of decision making. Thinking WIN-WIN may result in WIN-WIN agreements between countries, companies and suppliers, employer & employees, any group of people who interact to accomplish something.
With this in mind, it is obvious that the current course taken to deliberately begin an international trade war, is going to result in a head-on collision between the USA and China. All affected will be hurt in the end.
It is therefore encouraging to learn that the leaders of 44 African countries have signed a deal to create one of the world’s largest free trade blocs. The agreement was signed at a summit in the Rwandan capital, Kigali.
It is hoped the deal will come into force within six months, and increase prosperity for 1.2 billion Africans. Some more work needs to be done as all member nation will have to sign the deal before it can come into effect. It will be the result though of thinking WIN-WIN by African leaders. The African Continental Free Trade Area (CFTA) would remove barriers to trade, like tariffs and import quotas, allowing the free flow of goods and services between its members. In theory that should boost commerce, growth and employment. African Union commission head Moussa Faki Mahamat called it a “glorious challenge… which calls for the courage to believe, the courage to dare… the courage to achieve”.

Ton Haverkort