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'Trade wars are good?' Two words: Great. Depression.

President Donald Trump is itching for a trade war. No matter what you do for a living, that should scare you.I...

Posted: Mar 2, 2018 1:56 PM
Updated: Mar 2, 2018 1:56 PM

President Donald Trump is itching for a trade war. No matter what you do for a living, that should scare you.

In a trade war, countries impose tariffs and other barriers on imported products, often in retaliation for actions taken by a trading partner.

That can slow down business activity around the globe by crimping international trade. In a worst case scenario, trade wars can lead to a global depression. Protectionist trade polices are one of the primary factors economists cite for deepening the Great Depression.

So if there's one thing that most economists agree upon, it's no one wins a trade war.

But President Trump doesn't believe that. He tweeted out Friday morning that for the United States, a trade war is "good" and "easy to win."

Here's how US businesses and consumers stand to lose if President Trump gets his wish for a trade war:

Prices will go up

This much is certain. In a trade war, US consumers and businesses will be left with the bill.

President Trump says he's planning to impose a 25% tariff on imported steel and a 10% tariff on imported aluminum. That means the price of cars, appliances, packaged food and everything else that uses steel or aluminum is bound to go up.

Related: Trump's trade fight jolts Wall Street

Even the aluminum industry's trade group admits the smelters remaining in this country can not make enough additional aluminum to replace the supply coming from overseas. When the tariffs are put in place, imported products will continue to come in -- at higher prices.

Since foreign steel and aluminum prices will be higher, domestic producers are likely to raise their prices as well.

American businesses will lose sales

Yes, America buys more from other countries than it sells to its trading partners. But don't discount the amount of goods and services the United States does export -- $2.3 trillion dollars worth.

A trade war by definition means that other countries are going to slap tariffs and restrictions on those US goods and services, making them more expensive, and less competitive -- if they're allowed into those countries at all.

And once an American business loses a contract to sell its products overseas, it can take a long time to win that business back. Their customers will find other, perhaps more dependable suppliers while the trade war is waged.

Many well-paying jobs are at risk in a trade war. In 2017, the United States exported $60 billion worth of auto parts, $56 billion of civilian aircraft, $52 billion of new cars and trucks, and $51 billion of pharmaceuticals.

Related: Why steel and aluminum tariffs matter to the U.S. economy

That's only goods. The United States has been primarily a service economy for decades now. Today about five times as many jobs are in the service sector, such as finance, media, transportation and retail, than are in goods producing sectors, such as manufacturing and mining.

The good news is that the United States had a $243 billion services trade surplus.

American trading partners are also among its biggest lenders

The federal deficit is big and getting bigger. The Committee for a Responsible Federal Budget estimates the deficit could swell to $1 trillion by next year.

Wall Street worries that the rising amount of debt could drive up the interest rates on the government debt, since the Treasury Department will have to offer higher rates to borrow more money. That would increase the cost of borrowing for consumers and businesses, since many types of loans -- including mortgages -- track government bond rates.

One thing keeping rates in check so far is the demand for US debt from overseas. America's foreign trading partners, including China, are among the largest buyers of that debt. It added $127 billion to its holdings last year and now owns more than $1 trillion in U.S. debt, making it the largest foreign holder of our debt.

The trade deficit that President Trump decries is one of the reasons for those holdings. It gives foreign countries a powerful incentive to buy that debt, since they have to do something with the dollars they get back on those sales.

If the trade gap shrinks, for whatever reason, China won't have as much incentive to buy US debt, and interest rates could rise significantly.

Mississippi Coronavirus Cases

Data is updated nightly.

Cases: 308111

Reported Deaths: 7122
CountyCasesDeaths
DeSoto20826248
Hinds19910411
Harrison17510302
Rankin13334276
Jackson13118243
Madison9908210
Lee9871170
Jones8297160
Forrest7525147
Lauderdale7198237
Lowndes6272144
Lamar611084
Lafayette6039117
Washington5281133
Bolivar4772129
Oktibbeha455897
Panola4445103
Pearl River4428141
Warren4284118
Marshall4276100
Pontotoc416972
Monroe4061132
Union403975
Neshoba3994176
Lincoln3871109
Hancock372885
Leflore3468124
Sunflower329589
Tate322782
Pike3188104
Scott310872
Yazoo304468
Alcorn298065
Itawamba297177
Copiah293265
Coahoma289778
Simpson288284
Tippah284868
Prentiss275759
Marion266079
Leake261373
Wayne261341
Grenada255384
Covington254780
Adams246082
Newton245161
George238147
Winston225981
Tishomingo222267
Jasper219748
Attala213473
Chickasaw205057
Holmes186872
Clay182854
Stone179331
Clarke177076
Tallahatchie175540
Calhoun163531
Yalobusha159236
Smith158834
Walthall130643
Greene129433
Lawrence126423
Noxubee126233
Montgomery125542
Perry125138
Carroll120926
Amite120141
Webster113532
Jefferson Davis105432
Tunica102725
Claiborne101330
Benton97325
Kemper95428
Humphreys94332
Franklin82123
Quitman78916
Choctaw73417
Wilkinson64928
Jefferson64828
Sharkey49617
Issaquena1686
Unassigned00

Alabama Coronavirus Cases

Cases: 520503

Reported Deaths: 10722
CountyCasesDeaths
Jefferson754091487
Mobile38938798
Madison33898495
Tuscaloosa25297443
Montgomery23992567
Shelby23124239
Baldwin20652300
Lee15541165
Calhoun14301311
Morgan14145270
Etowah13665346
Marshall11967219
Houston10381278
Elmore10001200
Limestone9822147
Cullman9481188
St. Clair9435234
Lauderdale9223227
DeKalb8748181
Talladega8071171
Walker7100275
Jackson6762110
Autauga6734103
Blount6497135
Colbert6210130
Coffee5404112
Dale4766110
Russell429038
Franklin419982
Chilton4087109
Covington4056114
Tallapoosa3898146
Escambia388574
Dallas3531149
Chambers3503122
Clarke346560
Marion3066100
Pike305876
Lawrence295395
Winston272572
Bibb256459
Marengo248661
Geneva245875
Pickens233059
Barbour225255
Hale218775
Butler212566
Fayette209260
Henry187744
Cherokee182144
Randolph176941
Monroe172040
Washington164238
Macon154848
Clay149555
Crenshaw149257
Cleburne146241
Lamar139334
Lowndes136553
Wilcox124327
Bullock121340
Conecuh109128
Perry107926
Sumter102932
Coosa99328
Greene91034
Choctaw58724
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