Latin American Herald Tribune
Venezuela Overview
Venezuelan Embassies & Consulates Around The World
Sites/Blogs about Venezuela
Venezuelan Newspapers
Facts about Venezuela
Venezuela Tourism
Embassies in Caracas

Colombia Overview
Colombian Embassies & Consulates Around the World
Government Links
Embassies in Bogota
Sites/Blogs about Colombia
Educational Institutions


Crude Oil
US Gasoline Prices
Natural Gas

UK Pound
Australia Dollar
Canada Dollar
Brazil Real
Mexico Peso
India Rupee

Antigua & Barbuda
Cayman Islands

Saint Kitts and Nevis
Saint Lucia
Saint Vincent and the Grenadines

Costa Rica
El Salvador



What's New at LAHT?
Follow Us On Facebook
Follow Us On Twitter
Most Viewed on the Web
Popular on Twitter
Receive Our Daily Headlines

  HOME | Opinion (Click here for more)

Beatrice Rangel: Trade Wars - Neither Easy nor Good!!!
Former Venezuela Presidential Chief of Staff Beatrice Rangel looks at the strategy behind President Trump's decision to raise tariffs on steel and aluminum imports.

By Beatrice E. Rangel

President Trump continues to shock his country and the world with outside the box decisions that run counter to economic logic.

And while I truly believe that someone must shake up the Bretton Woods Order, I do not think dynamite to be the appropriate tool to reach such goal.

Indeed, the international institutional framework was built for a world economy where manufacturing reigned supreme. But as services took over and technology permeated every human activity, manufacturing has retreated.

The reduction of manufacturing within the world GDP can be ascertained by its participation in the U.S. economy. Manufacturing as a percentage of GDP declined from 27% in 1950 to 23% in 1970 to 14% in 2000 to 11% in 2009.

Services have filled this gap and increasingly technology has made its entry through services. This essentially means that both incentive as well as restrictive measures to manage the word economy must be adjusted to the new realities.

Protectionist measures that seal competitors out of a country could be a very antiquated and damaging tool.

Given the degree of internationalization of the supply chain there are many ways to circumvent tariffs.

But while the new short cuts are created or unveiled, prices will go up to consumers who will be hit by the measure.

The measure thus ends hurting those who it intends to protect.

Meanwhile those benefiting from the protectionist measure enjoy a newfound spring of rent extraction that freezes innovation and seals in cost increases.

From the political viewpoint, tariff hikes could trigger trade wars which are devastating to the initiator.

To fully understand how this boomerang effect can bring down the soundest economy in the world, one only needs to study the impact of the Smoot-Hawley Act of 1930 which raised U.S. tariffs to the highest level since 1828, sparking a devastating trade war that destroyed 66% of world trade from 1929 to 1934.

Today the results would probably be equally devastating.

In 1929 international trade only represented 5% of U.S. GDP. But by 2014 international trade represented 30% of U.S. GDP. Canada would be even worse off as international trade represents 60% of that country's GDP.

I thus think that President Trump probably has taken the decision to raise tariffs on steel and aluminum to gain strength and negotiate other significant matters for the U.S. national interest. But the gamble could be dangerous, as a trade induced deflation could materialize in a reelection year.

Beatrice Rangel is President & CEO of the AMLA Consulting Group, which provides growth and partnership opportunities in US and Hispanic markets. AMLA identifies the best potential partner for businesses which are eager to exploit the growing buying power of the US Hispanic market and for US Corporations seeking to find investment partners in Latin America. Previously, she was Chief of Staff for Venezuela President Carlos Andres Perez as well as Chief Strategist for the Cisneros Group of Companies.

For her work throughout Latin America, Rangel has been honored with the Order of Merit of May from Argentina, the Condor of the Andes Order from Bolivia, the Bernardo O'Higgins Order by Chile, the Order of Boyaca from Colombia, and the National Order of Jose Matías Delgado from El Salvador.

You can follow her on twitter @BEPA2009 or contact her directly at BRangel@amlaconsulting.com.


Enter your email address to subscribe to free headlines (and great cartoons so every email has a happy ending!) from the Latin American Herald Tribune:


Copyright Latin American Herald Tribune - 2005-2019 © All rights reserved