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The World Unpacked
Fixing Global Trade: Why Tariffs and Trade Wars Aren’t Enough
Dec 5, 2024
Michael Pettis, a nonresident senior fellow for Carnegie China and an expert on China’s economy, discusses the fractured state of global trade. He argues that to achieve freer trade, nations must implement more targeted interventions rather than relying solely on tariffs. The conversation delves into how trade dynamics have been manipulated, particularly by Germany and China, and critiques the U.S. role as the 'consumer of last resort.' Pettis advocates for a new framework akin to Bretton Woods to foster collaborative, fair trade policies.
27:25
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Quick takeaways
- The current global trading system is flawed as it fails to balance trade surpluses and deficits, necessitating proactive interventions from deficit countries like the U.S.
- China's export-driven economic model creates structural imbalances in global trade, emphasizing the need for collaborative international agreements to manage economic disparities.
Deep dives
The Flaws in the Current Global Trading System
The existing global trading system is deemed fundamentally flawed, as it neither embodies true free trade nor adequately addresses the inequities that arise from trade surpluses and deficits. Critics argue that while free trade theoretically promotes prosperity, the current reality is characterized by distorted markets influenced by national policies, particularly those of surplus countries. For instance, the U.S. must take proactive steps to rectify these imbalances, as mere theoretical adherence to free trade principles fails to hold. Without purposeful intervention from deficit countries like the U.S., a transition to a more equitable trading environment remains unlikely.
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Discover
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Listen to the best highlights from the podcasts you love and dive into the full episode