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Trade war

Trump trade policy a 'very dangerous precedent,' says Stiglitz

Nobel Prize-winning economist calls US a 'rogue country'

Joseph E. Stiglitz was recently in Japan as an adviser to the Japan International Cooperation Agency. (Photo by Yosuke Iwata)

TOKYO -- U.S. President Donald Trump's threats to slap tariffs on trading partners' exports as a way of wringing concessions from them sets "a very dangerous precedent," warned Nobel Prize winning economist Joseph E. Stiglitz in a recent interview with the Nikkei Asian Review.

Imposing steel tariffs based on "national security is going down a very dangerous route, because every country can claim almost everything in the name of national security," said Stiglitz, now a professor at Columbia Business School.

"If the U.S. is committed to following the international rule of law, it should've brought the cases to the World Trade Organization," Stiglitz added. "It's a very dangerous precedent, and that's why countries in Europe or all over the world are so concerned."

The Trump administration has been trying to negotiate trade disputes bilaterally, without bringing them to the WTO. "It illustrates very destructive effect that Trump is having on American society, American relations with other countries and on global society," said Stiglitz, who served as chairman of the Council of Economic Advisers under Bill Clinton.

Stiglitz suggested the world should work to establish international order without the U.S. "The U.S. and North Korea are the two rogue countries that won't go along with international rule of law," he said, slamming Trump's policies. "The WTO has to go ahead without the U.S. and appoint new judges with a majority vote."

Trump has moved aggressively on trade in recent weeks, targeting multiple countries with steep tariffs on steel and aluminum early March. He then separately announced tariffs on $50 billion worth of Chinese exports to the U.S.

Reaction to the duties has been mixed in Asia. China quickly retaliated with tariffs on U.S. exports with a similar value, a move that Stiglitz called "an example of the right, measured response."

South Korea secured an exemption to the U.S. steel tariff by giving the U.S. auto industry greater access to its market, and by promising to bolster transparency in its foreign exchange policies. "I think [the South Koreans] have made a major mistake in signing a new agreement. The two provisions never would've been approved if there had been  a more democratic, open process," Stiglitz said.

Japan has not responded officially to Trump's tariff policy. "What Japan is doing right now is appeasement," said Stiglitz. "Trump is a bully and appeasement won't work. You have to retaliate."

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