blog.gov.jeThe Minister for Economic Development has presented the Colin Powell Award 2025 to Jersey’s brightest young economist, Hubert Libich, recognising his outstanding achievement in last year’s Future Economist Essay Competition.
The competition attracted an impressive number of well‑researched and thought‑provoking submissions, offering insightful analysis on key economic themes including trade inflation, and economic growth.
Hubert’s winning essay explored topical challenges in global markets and barriers to trade – issues that many world leaders and economists are currently grappling with. What set Hubert apart from other potential winners was his ability to combine economic theory with historical and political context. This interdisciplinary approach reflects a unique talent he plans to develop further through his upcoming studies in History, Politics and Economics at a leading UK university.
In recognition of this achievement, Hubert has been offered the opportunity to undertake a summer work placement with the Economics Unit. We look forward to welcoming him to the team and following the next stages of his Economics journey.
An extract from Hubert’s winning submission can be read below.
Hubert Libich receives the Colin Powell Award from the Minister for Sustainable Economic Development, Deputy Kirsten Morel
WHO WINS FROM TRADE WARS? By Hubert Libich
“The clearest example of selective winners in a trade war can be seen in President Donald Trump’s tariffs of 2018-2019. On March 1st 2018, Trump imposed a 25% tariff on steel [Econofact, 2019], stating later in a twitter post: “Trade wars are good, and easy to win.” [Trump, 2018]
The textbook intention behind this, is exactly pointing towards what the economic theory suggests – protect domestic industry and reduce imports. As shown in increase of area E, American steelmakers saw ~4,800 job increase between 2018 and 2019 [Econofact, 2019], in addition to shifting output from Q1 to Q3 which equated to 174.4M metric tons of steel being produced [USGS, 2019]. On the other hand, steel prices spiked from ~$700 per ton, in early 2018, to ~$900 per ton by mid-2018 [S&P Global Platts, cited in Econofact, 2019]. This meant that firms such as U.S. Steel and Nucor received record profits, due to the highest price level of hot-rolled coil (HRC) steel in nearly a decade.
However, in the following year, prices fell back as low as ~$600 per ton, close to pre-tariff levels [CRU Group, 2019], illustrating the short-lived victory of the impact of tariffs. The reason why price fell, contrary to economic theory, is mainly due to oversupply of steel in the American market. Between 2018 and 2019, the capacity utilisation for steel rose from ~78% to ~80% [USGS, 2019] meaning that the markets were suddenly flooded with more domestic steel at the time, outpacing what the market actually demanded. In addition to supply surpassing demand, retaliatory tariffs from China, the European Union, Canada and Mexico also hindered American producers from exporting their domestic steel, removing the possibility of it contributing to the circular flow and reducing the balance of trade deficit.
In the short term, it is evident that US steel producers emerged as the winners of the trade war, benefiting from higher prices, record profits, and modest job gains. Yet, despite the $71 billion tariff revenue in 2019 [USAFacts, 2020], these gains were evaporated due to oversupply and foreign retaliation, leaving consumers and steel-dependent industries worse off.
Ultimately, the most durable “victory” was political rather than economic: Trump could frame the tariffs as evidence of defending the American industry. Seeing past this patriotic lens, I firmly believe that if there was greater domestic demand for steel, for example: building a national infrastructure megaproject that would require significant amounts of steel. Potentially, Donald Trump and U.S. steel could proclaim a far greater and long-lasting win – an expansion in the productive potential of the economy…
… In the final balance, my judgement is that, there is only one common winner in the three incidences, spanning decades, is welfare loss. No matter how successful each of the three trade wars were in achieving their designated objectives, it is an obvious fact that welfare loss will always delineate to a loss for the consumer, paying the higher price in the short-run and long-run.
Yes, tariff revenue can be of a significant quantity, but will it be correctly allocated by the government? Yes, economic theory illustrates job creation and an increase in production surplus, but why did the Smoot-Hawley tariff triple unemployment?
The truth is that graphs and economic equation cannot capture the irrational behaviour of humans – resentment, retaliation and sour corrosion of trust between nations. History does not remember the winners of trade wars. Rather, it is the grave cost payed by some producers and consumers which is retained in the lessons of history. In this day, it is common to see this suffering is cloaked by political or patriotic masks to avoid the one prize no nation ever intended to win: welfare loss.”