Interviewer: Thank you for taking the time for this conversation on a bank holiday Monday.
It's often said that there are no winners in a trade war,
but what I would like to explore with you is your view on whether
this common assertion is correct if
we look at it at different levels, for example global,
national, company, and the individual.
Can we try to pick this apart starting global?
Is it true that there are no winners?
Mr. Wolf: It depends in part on what you mean by a trade war
which is an extraordinarily loose term.
If we are thinking of a trade war as
a relatively modest increase in protection between two countries,it's
sort of standard economics would suggest it's very unlikely that the world economy,
as a whole, will be better off as a result,
that is to say he will be able to afford in aggregate a higher standard of living.
But if you imagine the distributional effects matter,
if it's conceivable that it could benefit some countries at the expense of
other countries and the countries it benefits are
poorer or the people who are benefiting within it are poorer,
then you could imagine in some sense,
that world welfare is increasing. And the basic point here is,
of course, not only defining what a trade war is,
you also have to define what it means to lose.
These are really, really complicated questions.
Interviewer: Let me explore this then.
So far, as you are concerned,
how would you visualize winning a trade war or losing a trade war?