Of Alberto Cossu

Source: Beyond the Border
The decision of the president of the United States Donald Trump to put duties on steel and aluminum imports it generated strong reactions from many countries. In particular the European states, with Germany in the lead, they invoked the exemption in the name of the alliance that binds the USA to Europe. Trump's move, already anticipated by the New York tycoon during the election campaign, comes after a thorough investigation – requested in April of 2017 by the president himself - to ascertain the causes of the American trade imbalance and prepare appropriate measures to reduce it.
We are, Indeed, in front of a act of an exquisitely "political" nature which aims to protect the United States from the significant overproductive imbalance in the steel sector generated mainly by China. Beijing has caused the growth of imports and the subsequent destruction of US companies in the sector. That is, as well as posing a national security problem for the United States, it has compromised the production capacity aimed at serving the country's strategic industries, also generating negative repercussions on employment levels.
According to the neo-liberal approach, a country specializes in productions in which it has a comparative advantage over others e, if it fails, productions decline and disappear. This rule should, so, also apply to the US steel sector. But the economy is not just about efficiency and productivity, political reasons also have an impact on it.
So do the states, directly or suffusedly, they form alliances with other states and in some cases protect completely inefficient production sectors, guaranteeing their long life despite the economic reasons cited by economists. Ma, above all, they intervene in favor of strategic production sectors such as defense and information technology, that is, those on which the national security and technological development of a country depends.

The Chinese strategy

The China, certainly, sets the example in this sense in the steel sector. An attitude, the Chinese one, which has already caused the accusations of dumping by the EU and the United States and maintaining an oversized production capacity compared to the absorption possibilities of the domestic and international market. The political reasons for this attitude can be found in the fact that the possible downsizing of a highly labour-intensive sector, like the steel industry, would have serious consequences in terms of employment and therefore, consequentially, policies.
The theories expounded by are of great interest on these questions Mariana Mazzuccato, Professor in the Economics of Innovation and Public Value all’University College London, which, with great clarity and incontrovertible evidence that many sectors of the national economy (specifically the United States) they are linked to massive state investments, without which a competitive economy would not have been created.

Trump's move, explained

Il free market from an economics textbook, therefore, only in the fertile imagination of economists who often neglect the political reasons underlying international relations, geopolitics and geoeconomics. The market as we know it today is the product of an agreement and, in the specific case, of a political order born after the war led by the USA to which Europe conformed because, Perhaps, he had no other alternatives. To date, this order is no longer suitable for the new players present on the international arena (including Russia, China and India) e, Perhaps, Even the United States itself is starting to dislike it.
The USA, probably, they are reviewing their strategic options and are no longer being so generous towards the European economy as well as towards China because they have a trade balance imbalance huge. President Trump said this clearly during the election campaign: «Why should the United States endure a negative trade balance of gigantic proportions?».
But Trump also made it clear that he did not intend to maintain an imperial policy. Reducing a trade deficit of such proportions is the consequent step towards abandoning this policy. The targeted tariff policy that the Trump Administration is about to implement constitutes a signal for Europe because, as well as dividing it further, risks breaking it economically. All this makes even more sense if we also consider the effects of the tax reduction policies approved at the end of the year by the US Administration which, as the former Italian Minister of Economy claims Giulio Tremonti, they will be used not only to revive the country's economy, but also to redefine the international role of the United States. Such policies point, Indeed, to stimulate internal production, and not consumption, and to change the production structure of the country.
In light of these dynamics, the old interpretations linked to the neo-liberal economic model, now viewed with distrust even within the International Monetary Fund, they risk leading us astray by preventing us from seeing things as they are. The reality is that the international economic order is moving towards new equilibria in which political reasons increasingly count. The new hierarchies between states will be based on the ability to develop new technologies and guarantee effective protection of the national interest.