Photo: BloombergThe 1 March announcement by US President Donald Trump of tariffs of 25% on steel and 10% on aluminium, confirmed with two presidential proclamations on 8 March, has provoked fears of retaliation and the possibility of a trade war. Trump had tweeted: “When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. To understand this possibility, let us review what trade economists call the “optimum tariff”. The optimum tariff is defined as tariff that maximizes national welfare. This, again, corroborates the optimum tariff theory.

Source: Mint March 11, 2018 18:11 UTC