Administration: Trade War is About Forcing Japan and Europe to 'Reflate': I may be out of my depth, but this sure seems to be awful news. Bad enough that we've been treating our pal Japan like a red-headed stepchild because of its poor economic record this past decade (even while kissing up to Communist China); now we're openly using tariffs to bludgeon our allies into making macroeconomic decisions more to our momentary liking. Such as, it would seem, slashing interest rates in inflation-wary Europe. The Financial Times (Nick Denton's alma mater!) interviewed Grant Aldonas, Dubya's under-secretary of commerce for international trade "and one of the architects of the decision last week."
"We have told people over time that if you don't see stronger growth abroad, you end up seeing friction on the trade account," he said. "There is only so much patience that you have when you are talking about very serious macro-economic issues that have been out there for a long time." [...]Of course, low commodity prices and a strong dollar helped stave off a global financial crisis in 1998, but never mind all that now. Run your economy as we say, our we'll touch of a global trade war, for the bloody punitive hell of it! Or, as Aldonas put it, "This is one of those situations ... where things have to get worse before they can get better." Posted by at March 11, 2002 01:16 PMHe said failure by the EU and Japan to reflate their economies, combined with the strength of the dollar, would imperil recovery by the US agriculture and high-technology industries, which depended heavily on sales abroad.
On agriculture, Mr Aldonas said the effect of deflation in Japan and recession in Europe had been "to drag down commodity prices across the board in the US," while the strong dollar had hurt exports.