US Official Says Trade War Damaging Global Growth

Extreme protectionism could undermine free trade and runs contrary to the advance of globalization, a veteran US trade executive said in a press release late Monday.

Globalization and free trade have “produced an era of unprecedented, worldwide economic growth,” said Chris Lytle, executive director of the Port of Oakland in the US western state of California, calling free trade “the backbone of worldwide economic growth,” Xinhua reported.

He made the remarks when addressing an audience of 5,000 graduates of Central Washington University at Kent in Washington state over the weekend, according to the press release posted on the website of the Port of Oakland.

The trade executive urged the graduates to embrace globalization, saying “globalization is the story of the 21st century.”

He called on the graduates to explore opportunities worldwide as they embark on careers, and to help combat the spread of protectionist measures that could jeopardize their future.

“Don’t disengage from the world—don’t be part of the illogical rush to draw the drapes and turn out the lights,” he said, and added that free trade and the world economy are “what’s right for a world struggling to come together ... not pull apart.”

The potential trade war that has been worrying Wall Street since Trump took office in January 2017 is getting closer to becoming reality, one which could rattle financial markets, CNN reported.

In their latest “Liquid Insight” note, Bank of America Merrill Lynch global economists Aditya Bhave and Ethan Harris dismiss the notion that US tariffs already imposed on several trading partners are merely negotiation tactics.

“We are more concerned,” they write. ”We see the potential for trade tensions to escalate to a trade war.”

Tensions did escalate over the weekend when Trump left the Group of 7 summit meeting early and, after agreeing to sign the group’s communique, refused to do so. In the communique the six remaining nations of the G7—Canada, Britain, France, Italy, Germany and Japan—agreed on the need for a “free, fair and mutual beneficial trade” and to “strive to reduce tariff barriers, non-tariff barriers and subsidies.”

The US has already imposed 25% tariffs on steel imports and 10% tariffs on aluminum imports and has threatened to impose 25% tariffs on $50 billion worth of Chinese imported goods later this month.

The situation could become even more complicated if US-North Korean negotiations on nuclear weapons end in disappointment. In that case, US tariffs against China will be “back on the table”, said Jack Ablin, chief investment officer of Cresset Wealth Advisors, in a recent CNBC interview.