Is free trade really free?

Earlier this month President Donald Trump announced higher tariffs on steel and aluminium imports into the US, igniting a storm of criticism. "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," he tweeted. "Example, when we are down $100 billion with a certain country and they get cute, they don't trade anymore -- we win big. It's easy." At over $375 billion, the US had the biggest trade deficit with China in 2017. Trump has asked China to reduce the imbalance by $100 billion or face higher tariffs. China lovers predict that the US will lose in a face off with China. China can stop soya bean and corn beef imports hitting farmers in Mississippi, Missourie and other US states. "Xi could impose exit taxes on goods manufactured in China in ways that savage Apple, General Motors and Wal-Mart. Canceling Boeing orders could cost more than 180,000 American jobs overnight. Beijing could dump its $1.2 trillion of US government bonds, sending yields skyrocketing," wrote W Pesek. Indeed, China could do all those things and more but can it withstand the effects of its actions. Canceling food imports from the US will reduce choice of suppliers, increasing prices. Canceling Boeing planes leaves just Airbus which will surely try to maximize profits. Dumping US securities may weaken the dollar but what will China buy instead? If it buys yuan, its currency will become very strong, increasing the prices of its goods and decimating exports. Xi Jinping has crowned himself emperor which has surely multiplied the number of people who would like to have his head. "The main reason for the big US CAD (current account deficit) is not unfair trade," wrote SA Aiyer. "It lies in the relatively low savings rate of the US." Apparently, CAD is the difference investment and savings in an economy and in the case of the US savings rate has fallen to a low of 2.6% of disposable income. Higher tariffs will increase prices of goods, taking retail inflation, which is too low at present, to 2% and allowing the Federal Reserve to increase interest rate. Higher returns will tempt people to save more and thus reduce CAD. Trump could actually win according to the theory of 'optimum tariff' which is "defined as tariff that maximizes national welfare", wrote Prof V Dahejia. Even if there is a trade war the US most likely will come out ahead. Rich countries have been erecting barriers to free trade by bringing up labor laws and Justin Trudeau is using women's rights and minorities because they are fashionable, wrote Prof Dahejia. India has lost heavily from trade agreements which reduced tariffs on goods but did not allow free movement of people. Free trade is not really free. It is a myth by vested interests.