WASHINGTON \u2014 In a trade war, as in a real one, people are wounded by friendly fire from their side. Consider some casualties in Donald Trump\u2019s \u201ceasy to win\u201d \u2014 his promise \u2014 trade war. Begin with the company whose green machines bear the name of the blacksmith who, in the 1830s in Grand Detour, Illinois, invented a self-scouring plow that could turn the Midwest\u2019s heavy black topsoil.<\/p>\n
Is the John Deere corporation \u201ctired of winning,\u201d as Trump promised that all Americans soon would be? Not exactly. The Wall Street Journal reports that U.S. farmers are purchasing fewer farm machines \u2014 Deere\u2019s profits from this business are down 24% from a year ago \u2014 partly because farmers\u2019 incomes have suffered as a result of the tit-for-tat trade spat that Trump started with China, which has included China canceling the purchase of almost 500,000 metric tons of soybeans. Some good news for John Deere might be ominous news for U.S. farmers: Equipment sales to Brazil and Argentina are up, perhaps partly because China has increased purchases from those nations\u2019 farmers, who are American farmers\u2019 competitors.<\/p>\n
Nowadays, even sensible government actions injure some farmers. Many of them have come to depend on government\u2019s misguided mandate regarding ethanol in gasoline, and the Journal reports that 31 refineries have been given ethanol waivers from the Environmental Protection Agency. The Iowa Corn Growers Association says the exemptions could eliminate \u201cnearly one billion bushels of corn demand.\u201d Whether ethanol would have achieved sacramental status in Washington if Iowa did not have presidential caucuses is a subject for another day.<\/p>\n
Home Depot, the world\u2019s largest home improvement retailer (more than 2,000 stores in North America), partly blames the trade war for its lowered growth expectations. The tariffs, which The Financial Times accurately refers to as \u201cimport taxes,\u201d will, according to a JPMorgan estimate, cost the average U.S. household \u201caround $1,000 a year.\u201d If so, this Trump tax increase \u2014 it is his alone \u2014 is more important to the average American than his (actually Congress\u2019) tax cut.<\/p>\n
The Financial Times recalls that \u201chundreds of U.S. companies and trade associations said in a joint communique in June that the proposed duties would cause the loss of two million jobs and reduce U.S. economic output by 1%.\u201d The losses and reduction are related to the fact that, as Allan Golombek of the White House Writers Group notes, \u201cOver 60% of U.S. imports are used by businesses in their products and production processes.\u201d Hence Trump\u2019s tariffs make U.S. goods more expensive, thereby dampening U.S. consumer activity. And exacerbating trade deficits, which do not matter other than as irritants to Trump, who thinks they indicate foreigners taking advantage of Americans by selling them things they want.<\/p>\n
Uncertainties infused into the global economy by the trade war between the world\u2019s two largest national economies probably have helped to produce a global slowdown and fears, perhaps somewhat self-fulfilling, of an approaching recession. The fourth-largest economy, that of heavily export-dependent Germany, is already shrinking. There, as The Economist reports, \u201cinterest rates are negative all the way from overnight deposits to 30-year bonds. Investors who buy and hold bonds to maturity will make a guaranteed cash loss.\u201d<\/p>\n
This does not suggest economic health but might produce something pleasing to the president whose macroeconomic theory makes up in brevity what it lacks in nuance: \u201cLow interest rates are good.\u201d He is forever hectoring the Federal Reserve to lower rates, which it might again do if it sees a recession tiptoeing toward us. So, a recession would be an interestingly injurious carom \u2014 a win, of a perverse sort \u2014 from his trade war.<\/p>\n
From May 1937 to June 1938, there occurred the \u201crecession within [the] Depression,\u201d America\u2019s third-worst 20th-century contraction. About the causes of this, as about so many economic events, intelligent and informed people disagree. However, one theory is that capital went \u201con strike.\u201d Rattled and exasperated by the New Dealers\u2019 regulatory fidgets, investors flinched from economic activity. If so, this episode contains a warning for protectionists who seem oblivious.<\/p>\n
They fiddle with global supply chains, as though the world economy is a Tinkertoy that they can pull apart and reassemble with impunity. Actually, it is analogous to an Alexander Calder mobile: jiggle something here, things wiggle way over there, and there, and there. So: Tariffs on Apple (headquarters: Cupertino, California) iPhones that are made (actually, just assembled) in China might help Samsung (headquarters: near Seoul, South Korea) Galaxy phones sell in America. This is \u201cAmerica First\u201d in practice.<\/p>\n
George Will\u2019s email address is georgewill@washpost.com<\/a>.<\/p>\n