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How is the US-China trade war hurting Vietnam?

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THERE are growing fears that the US–China trade war will spread to Vietnam.

A logical way to approach the issue would be to start by examining the logic behind the US–China trade war and then assessing whether the same logic could lead to a US–Vietnam trade war.

The problem with this approach is that the US–China trade war defies economic logic.

Economic theory and empirical evidence demonstrate that free international trade is generally a positive-sum game where overall both sides gain from trade. They also show that trade wars are generally a negative-sum game, meaning that overall both sides lose.

There will inevitably be some who gain and some who lose within each country engaged either in free trade or a trade war, but from a national perspective, free trade is beneficial and trade wars are harmful.

SEE ALSO: Why the United States and China need to end the trade war

Good economic policy happens when policymakers do their best to weigh the inevitable trade-offs that result from their policies. When a policymaker such as US President Donald Trump refuses to recognise that there are divergent interests within their country and ignores the inevitable trade-offs that result from their policy choices, the ongoing trade war with China is unsurprising.

The ‘Trumpian’ trade war logic is based on a string of false premises. Trump maintains that a trade deficit is........

© Asian Correspondent