In an article for “Die Volkswirtschaft”, Ralph Ossa explains the economic damage that would result from the collapse of the multilateral trading system. According to his calculations, in the worst case, 25 percent of trade gains could be destroyed on average – with considerably variation from country to country. Switzerland would also have to reckon with major losses: according to Ossa’s calculations, real income in Switzerland would collapse by as much as 14 percent. Ossa sees three main reasons for the reorientation of American trade policy. First, the growing aversion to foreign trade among certain sections of the population, who faced major losses due to trading with China. Secondly, the frustration of US companies over the protection of their intellectual property in China and the state capitalism there, which the WTO can only control to a limited extent. And third, the apparent misperception of the Trump administration that foreign trade is a zero-sum game in which the US either wins or loses. In his article, Ossa elaborates particularly on the second reason and explains why the American-Chinese trade war is not primarily about customs policy, but about securing standards.
Read article (in German) on dievolkswirtschaft.ch