UnHerd with Freddie Sayers Wolfgang Münchau: Why Trump would win a tariff war
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Feb 5, 2025 
Economist Wolfgang Münchau, renowned for his expertise in European and German economies, shares insights on the dynamics of a tariff war. He highlights how tariffs can be used strategically in negotiations, viewing them as Trump's 'art of the deal.' The conversation navigates historical tariff impacts, the complexities of globalization, and the intricate U.S.-China trade tensions. Münchau also delves into the potential responses from the EU and the geopolitical ramifications, especially post-Brexit, painting a vivid picture of current global trade landscapes.
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Historical Role of Tariffs
- Tariffs were the primary income source for governments until the 19th century, stemming from mercantilist thought.
- Mercantilism prioritizes enriching governments through tariffs and export surpluses, aiming to accumulate gold.
Free Trade's Rise
- Free trade, rooted in the ideas of Adam Smith and Ricardo, gained prominence in the 20th century, emphasizing comparative advantage.
- This theory suggests specializing in areas of greatest relative strength, even if not superior in absolute terms, to optimize global production.
Globalization's Peak and Backlash
- Globalization's peak in the 1990s and early 2000s, exemplified by Clinton and Blair, facilitated China's economic transformation.
- This era, while prosperous, also sowed the seeds for the populist backlash against free trade.