According to an old African proverb, "When elephants fight, it is the grass that suffers." The same is true for full-blown trade wars: when major economies clash, developing countries will be among the hardest hit.
On June 1, the U.S. administration imposed import tariffs of 25 percent on steel and 10 percent on aluminum. The levies will affect not just China, but also Canada, Mexico and the countries of the European Union. As Cecilia Malmstrom, the EU Commissioner for Trade, observed at a recent event held by the United Nations Conference on Trade and Development (UNCTAD), "We are not in a trade war, but we could be." It is a situation that should concern everyone.
We know from history that nobody "wins" in a trade war. Tariff hikes by major trading countries represent a reversal of efforts since the end of World War II to eliminate trade barriers and facilitate global commerce. Since the General Agreement on Tariffs and Trade took effect in 1947, the average value of tariffs in force around the world has declined by 85 percent. That is no coincidence; rather, it is the result of multilateral cooperation, and eight rounds of global trade negotiations, first under the GATT and then under its successor, the World Trade Organization.