The world is embroiled in a mega-crisis comprising the Covid-19 pandemic, Russia's war in Ukraine, high inflation, recession fears and rising debt distress across emerging markets and developing countries. The last thing we need is an additional source of economic harm. But that's what we may get, in the form of another destructive trade war.
Trade wars are immensely damaging because countries tend to retaliate by erecting ever-higher trade barriers. This vicious cycle was blamed for greatly prolonging the Great Depression in the 1930s, which is why the United States led the effort to develop a new world trading system after 1945. For 70 years, global commerce was underpinned by the rule of law, with an international organisation -- the General Agreement on Tariffs and Trade, which was succeeded by the World Trade Organization -- ensuring impartial adjudication of disputes.
But in 2017, Donald Trump's administration effectively withdrew US support for the WTO and started a trade war with China.
