As the trade war with China continues with no real end in sight, those in charge of American trade policy might want to revisit the story of the American Civil War Battle of Shiloh.
It might be one of those stories familiar only to Civil War buffs, but the lesson of Shiloh seems to be one our president should heed.
The Shiloh battle came a year or so into the war, on the site of the small log Shiloh Church in southwest Tennessee. That’s how a terrible battle ended up getting named for an Old Testament city that was a place of peace and rest.
The U.S. Army contingent that gathered there in 1862 was led by two of the most celebrated West Point graduates ever, Ulysses S. Grant and his right-hand guy, William T. Sherman. Grant had quickly gone from being a store clerk in Illinois to a major general in the U.S. Army. He had found some success in Tennessee and was preparing to push into Mississippi.
Grant’s own account of this period is well worth reading, and a fine 2012 book on Shiloh by Winston Groom made the case that a great battle had been anticipated. Both sides hoped it would prove to be the decisive fight that quickly ended this war.
Sherman had been dismissive of repeated reports of a nearby Confederate threat. Early on a Sunday morning, he rode out to check for himself, just in time to see a host of Confederate infantry emerge from the woods and begin its assault.
The Union Army barely hung on that first day of horrific fighting, but reinforcements arrived overnight, allowing Grant to eventually drive the Confederates off. By the time the fighting finally subsided in this first great battle of the war, more than 23,000 from both sides were dead, wounded or missing.
Yet nothing much had really changed.
That’s when the reality of the war finally sank in for Grant: There wasn’t going to be any one decisive action that could bring it to a quick close. As Grant later wrote in his memoirs, “I gave up all idea of saving the Union except by complete conquest.”
It would take years and many more horrific battles.
Now, try to think back to when the recent trade conflicts first really escalated. It was March 2018, and maybe the easiest thing to remember from that period is the president’s observation that “trade wars are good, and easy to win.”
The S&P 500 index of American stocks slumped about 2.5% the day the administration announced its first broad tariffs on Chinese goods. Yet a fair reading is that this newly aggressive approach was at least going after real problems. The hope was to see a changed playing field that would protect American intellectual property in China from strong-arming, if not simple theft.
Trade officials in the administration, as described by Bloomberg in an excellent analysis last week, thought they had a carefully chosen set of tariffs to put pressure on the Chinese government without causing too much pain. Yet their plan went off the rails almost right away.
Administration officials had once suggested that there would be little reason to fear retaliation, as trade with the big American market was too big and important. But there has been, leading to escalation.
There were assurances that it was the Chinese really paying the tariffs on Chinese imports, but that’s simply not how it works. We pay, businesses and households. And China has lowered many tariffs on imports from other countries even as it slapped higher tariffs on American imports, according to a piece published by the Peterson Institute for International Economics, a nonprofit Washington economic and policy research organization.
As Bloomberg described, the aspiration to enter into a new and broad agreement for trade with China has died. More limited agreements with China have been close to being completed a few times, but then the momentum seems to stall.
It’s difficult to tell if that is now happening again, with an agreement that would at least boost Chinese imports of U.S. agricultural products. But as this column is being written, even that more limited agreement isn’t done.
Much as Gen. Grant finally realized that terrible April in 1862 about his war, by now we have to conclude that there’s no decisive moment coming. No brilliant maneuver will quickly end this trade fight with China on terms favorable to the United States. Once the shooting starts, conflicts just don’t seem to go that way.
There have been a few studies published already tallying the cost, from how much the typical American household has had to pay for tariffs to the dampening effect on economic growth.
Another item published by the Peterson Institute earlier this year caught my eye, because it was trying to make the call on who will emerge as the winner of America’s trade war with China.
The authors, Sherman Robinson of the Peterson Institute and Karen Thierfelder of the U.S. Naval Academy, looked at what would happen if tariffs as of June 1 remained in place, as well a different scenario that included additional U.S. tariffs.
There’s complexity in their analysis simply because the world is complex.
One reason is that businesses have had to respond as problems arise, coming up with workarounds to new and costly tariffs. That might have meant finding a new place to get something built, or seeking new sources for soybeans and other farm products that used to come from the United States.
Of course, it seems better to win a trade war than lose it, and the authors thought there would be a lot of winners.
Mexico, Canada and Japan are named, but it could have been a far longer list.
There will only be two real losers, the authors found. One will be China, the other the United States.
So both lose.
That is probably a notion Gen. Grant would have grasped right away.