One of the many advantages of the global trading system supported by the U.S. until now was that rich-country central bankers did not have to think about trade. There might be a liberalization of trade, broadcast far in advance, covering a small share of GDP, but no large or abrupt changes -- and certainly nothing of consequence negative for the economy.
We have no history of trade wars to draw on since the 1930s, and we took the system for granted. As a result, our forecasting models are biased toward underestimating the harms they do.
