The protectionist thinking like in the 1930s. Retailers and wholesalers warn against return to protectionist thinking of the 1930s. EuroCommerce Director-General Christian Verschueren warned of major consequences for global supply chains resulting from US President Donald Trump’s decision to impose additional tariffs on steel and aluminium imports from the EU, Mexico and Canada:
“The global trading system which the US was instrumental in building up over the last 70 years has created economic well-being throughout the world. Free trade has lifted millions from poverty in developing countries and enhanced the quality of life of everyone, not least in the US, whose companies have also built up a major multinational presence on the back of it. Attacking close allies with open market economies in the name of national security is not just unwarranted, but the protection it seeks to give these industries will ultimately harm their competitiveness – and backfire on all economies, not least the US. Protectionism simply does not work, and just makes everyone poorer.”
Retailers and wholesalers depend on global supply chains and need a predictable policy environment to operate in efficiently. Now, more than ever, it will be up to the EU to take the lead and defend the international trading system through a firm commitment to the multilateral trading system of the WTO flanked by the EU’s ambitious bilateral trade agenda. The recently concluded EU-Mexico agreement is a first step to implementing or concluding many others, whether with Japan, Vietnam, Mercosur or Australia and New Zealand, and shows a striking contrast with short-sighted American protectionism.
Calling on all parties to exercise caution and common sense, Verschueren added:
“Instead of creating a spiral of unilateral action and damaging retaliation, countries should look to using – and strengthening – the powerful tools for dispute settlement they have agreed to in the WTO. Our economies are just recovering from the financial crisis 10 years ago. The last thing they need now is a return to the economic thinking of the 1930s which was responsible for deepest depression in recent world history.”