International uncertainty is a weapon for Trump, study says

Trying to make sense of American trade policy under the Trump administration essentially boils down to understanding that its goal is creating international uncertainty, says a new study by the C.D. Howe Institute.Weaponizing Uncertainty is an unsettling read as its academic authors Meredith Crowley and Dan Ciuriak track the withdrawal from the TPP, its unacceptable demands in the NAFTA talks and the sketchy duties on Canada and Europe as a national security measures.While Trump and his cronies insist it will all work out in the end for the U.S. if no one else, the authors are unconvinced. “The uncertainty remains heightened, because no safety catches have yet been put on the potential triggers for all-out trade wars.”The U.S. has also picked a trade fight with China and there is no certainty about the outcome of this dispute. It's guaranteed that consumers everywhere will lose.The response by Europe and China to the American actions “risks further escalation by the Trump Administration, which only apparently knows how to escalate.”The uncertainty will only grow with the assertion of extra-territorial reach by the United States of its renewed comprehensive sanctions on Iran, which “has triggered a countermove by the European Union forbidding its companies to comply. Companies will be caught in the crossfire.”The next casualty could well be the World Trade Organization and its rules-based, liberal trading system which is crucial to exporting countries such as Canada. “We may wind up paying the costs of this lost confidence for years–even if full-blown trade wars do not erupt.”The authors equate uncertainty to a non-tariff barrier that impedes trade and investment. “Importantly, unlike actual tariffs, it has no direct price effect and is not subject to the disciplines under the WTO or under bilateral or regional free trade agreements. It is thus only indirectly observed and, by virtue of being indirect, it goes unchecked. Moreover, also unlike tariffs, uncertainty cannot always be easily withdrawn – like a good reputation ruined, its pernicious effects on confidence can take years to unwind.”They describe Trump trade policy “as a collection of implausible claims,demands, and threats, which are then retracted, then re-asserted, and so on. Outlandish, unworkable proposals to manipulate trade flows that appear deeply uninformed.”The authors say that “Those who understand the source of the bilateral trade balances between the U.S. and other countries have universally dismissed Trump's objective as nonsensical.”Alex Binkley is a freelance journalist and writes for domestic and international publications about agriculture, food and transportation issues. He's also the author of two science fiction novels with more in the works.