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News of Bahrain - The trade wars are here. Are trade blocs next?

4 June 2019

In a fascinating new paper, economists David S. Jacks and Dennis Novy argue that today's contentious trade disputes recall what happened during the Great Depression of the 1930s. Led by Britain and Germany, competing trading blocs governed large portions of global commerce. Something similar is happening now. Witness President Trump's threat to impose a 5 percent tariff on Mexican imports as a way of reducing illegal immigration. "The trade wars of the present day [may lead] . . . to a reorientation of world trade around China- and U.S.-centric trade blocs," they write. To be sure, MFN was not always followed with religious fervor.

Trade Blocs and Trade Wars during the Interwar Period, David S. Jacks, Dennis Novy, NBER Working Paper No. 25830,Issued in May 2019

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