By Arnold Kling
The WindsofChange blog asks, will the foreign-policy rift over Iraq spark a trade war between the U.S. and other countries?
Indeed, a long term French campaign to introduce retaliatory and anti-USA tarrifs in the EU strikes me as not only likely, but probable.
As an economist, I would say that of all the ways to express disagreement with another country’s policies, cutting off trade is one of the least effective. If we boycott French wine, for example, we damage French wine producers (who may or may not have anything to do with French foreign policy). But we also damage American consumers as well as American exporters (because if we import less this will raise the value of the dollar and make our exports less competitive). Finally, a trade barrier against one country might simply divert trade to another country with equally odious policies.
Trade barriers, like acts of terrorism, are weapons of the weak. A country like the United States is better off expressing its views on foreign policy directly. See Oil Econ 101.
For Discussion. What is the track record of economic sanctions in producing the changes desired when they were imposed?