"Trade wars" harm the poor and can result in real wars

TL;DR

In his article "Anti-Democratic Forces Can Be Fueled by Trade Wars" published in Dagens Arena, Johan Norberg warns that U.S. protectionist policies and trade wars can strengthen nationalism and populism. He draws historical parallels to the 1930s Smoot-Hawley tariffs, which worsened the Great Depression and fueled political extremism. Norberg argues that tariffs lead to economic self-harm, increasing prices, weakening exports, and creating political instability. He also highlights how trade conflicts, like the Austria-Hungary vs. Serbia "Pig War" (1906–1908), escalated nationalist tensions. The article cautions that protectionist policies risk destabilizing democracies by empowering populist, nationalist and authoritarian movements.

Historian and liberal intellectual Johan Norberg writes via Dagens Arena how trade wars can undermine democracy, using historical and contemporary examples. He discusses Donald Trump's protectionist policies, particularly his tariffs on Mexico, Canada, and the EU. Norberg argues that these trade restrictions, meant to protect domestic industries, often backfire by:

• Raising prices for consumers disproportionately harms low-income households.

• Disrupting supply chains since industries (e.g., automobile manufacturing) rely on imported components.

• Provoking retaliation, as seen when Canada and Mexico imposed counter-tariffs on U.S. goods.

Norberg compares this to the Smoot-Hawley Tariff Act (1930), which triggered a global trade war, reducing world trade by two-thirds and contributing to mass unemployment and democratic collapse in several countries. He highlights how economic hardship can fuel nationalist and anti-democratic movements, as seen in Europe during the 1930s.
Additionally, he references the Pig War (1906–1908) between Austria-Hungary and Serbia, where trade barriers led to Serbian nationalism, escalating tensions that ultimately contributed to the assassination of Archduke Franz Ferdinand and World War I.

Norberg warns that modern trade wars could have similar effects, arguing that:

• Economic instability breeds resentment and political extremism.

• Populist leaders exploit trade conflicts to justify nationalism and protectionism.

• Democratic governments risk being replaced by authoritarian forces if economic crises escalate.

While acknowledging that Trump is unpredictable and might negotiate trade deals, Norberg advises caution and strategic diplomacy rather than full-scale retaliation. He suggests that symbolic countermeasures may be the best response rather than escalating tariffs.

Concluding Reflections

Johan Norberg's article highlights the historical dangers of trade wars, emphasizing that economic protectionism often leads to political instability and anti-democratic movements. By examining the Smoot-Hawley tariffs, the Pig War, and Trump's trade policies, he warns that economic nationalism can fuel populist extremism, disrupt global markets, and weaken democratic institutions. Norberg argues for measured responses to trade conflicts, advocating for diplomacy over economic retaliation to prevent long-term political and economic damage.

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