THE Great Global Trade War has begun. It will end in higher prices, falling production, reduced exports, a jump in unemployment, lower living standards - and ultimately in armed conflict. We have been here twice before: in the run-up to the First World War, and in the 1930s leading to the outbreak of the Second World War. So much for an isolated UK being able to strike new free trade deals after Brexit.

The balloon went up on Thursday when an increasingly volatile and isolated Donald Trump suddenly announced he was slapping a levy of 25 per cent on imported steel and 10 per cent on imported aluminium, ostensibly to stop other countries dumping these materials in the US market below cost. There are three important points to note here.

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First, Trump consulted no one regarding this declaration of trade war – not his inner White House staff, his trade advisers or the Congressional Republican Party. We are dealing with a president who shoots from the hip. That hardly makes for a stable world. Especially after Vladimir Putin announced Russia was building new, nuclear-powered, long-range cruise missiles geared to thwarting America’s defences.

Trump clearly took the unilateral decision to spark an international trade war to divert attention from mounting problems besetting him at home. Last week brought a host of new problems for the administration. The American right turned on Trump after he appeared to prevaricate on defending the (machine) gun lobby.

Then his closest political advisor, son-in-law Jared Kushner, had his White House security clearance mysteriously downgraded. This is connected with Kushner’s use of access to the President for business dealings. Adding to Trump’s sense of isolation, last week also saw the departure from the White House of the Hope Hicks, ostensibly Trump’s communications director but actually his de facto Oval Office therapist.

But third, Trump’s steel tariffs were well targeted. Never think that The Donald is an idiot. He is as crafty as they come. Most US steel imports come from countries that are in a limited position to retaliate: Canada, Brazil, South Korea and Mexico. Think of this as a warning directed ultimately at the EU and China, but not yet pulling the trigger on them. Also, by singling out Canada and Mexico, Trump is further dismantling NAFTA, the North American Free Trade Area. I hope Messers Fox, Johnson, Davies and Rees-Mogg are taking note.

That said, there is no doubt that Donald ‘America First’ Trump is edging towards an all-out trade war with China. In 2016, the US exported goods worth $116bn to China but imported a massive $463bn of stuff in return. As a first step, in January, the Trump administration imposed punitive duties on Chinese solar cells, the better to support the US fracking industry (plus add to global warming). The Chinese - who need global free trade to capture markets in Europe, the UK and developing world - responded gingerly to the Trump provocation. China’s commerce ministry threatened to block imports of US animal feed – hardly tit-for-tat.

More significantly, President Xi Jinping dispatched his top economic adviser, Liu He, to Washington in a bid to head off trade war. Liu, who has a Masters degree from Harvard, was sitting down with administration officials when The Donald announced his steel and aluminium tariffs. Nothing could be more calculated to snub President Xi, who is likely to be anointed lifetime Chinese leader – the first since Mao - at this week’s National People’s Congress in Beijing. The world is edging ever closer to a US-Chinese showdown.

What of the EU? Last year, in an interview with the Bilt newspaper, Trump demanded that BMW, Daimler and Volkswagen manufacture more of their cars in America and threatened a border tax of 35 per cent if they did not. The new steel tariffs should be seen as part of Trump’s war of nerves with German car firms.

Sensing this, the European commission president, Jean-Claude Juncker, was quick to respond. Juncker warned that the EU could retaliate by imposing tariffs on iconic US goods such as Harley-Davidson motorbikes, Levi jeans and Kentucky bourbon. Again, this is largely verbal joisting, but it only takes one miscalculation and the world is in deep trouble.

Trump is steering the world away from a rules-based trading system to one premised on bluster, threat and naked blackmail. Of course, the previous rules-based system (managed by the World Trade Organisation) was created by America and its European allies precisely to solidify their dominance of the global economy, by forcing lesser trading partners to open their economies to Western imports. However, the WTO did limit a free-for-all of competitive devaluations, hidden trade barriers and punitive tariffs. Now US economic hegemony is disappearing, Trump sees no gain from sticking by the rules America itself once forced on the rest of the world.

Yet there are deeper forces at work than the accidental presidency of Donald J. Trump. Neo-liberalism, with its attendant emphasis on “free trade”, was an historical phase premised on US economic and political domination. It served the interests of a few high-tech monopolies, with their extended supply chains, and the big global investment banks who finance them.

For a time, a revived Chinese capitalism was part of this system, supplying cheap, off-shore manufacturing facilities to American companies (and letting the latter avoid domestic US taxes into the bargain). That system is now in terminal crisis – only UK Brexiteers seem not to have noticed.

For starters, China is shifting from subordinate manufacturing colony to a global, capitalist power in its own right. It is challenging the US for markets everywhere. Factious Europe – including the UK - is on course to be crushed economically, technologically and politically between retreating US capitalism and a rising Chinese one. In the two previous epochs where free trade broke down, before each of the two world conflicts, it did so because the economic rivalries of the big powers turned toxic. We are fast approaching another of these episodes. This time the consequences could be fatal.

The election of Donald Trump has introduced a wild card into this fraught geopolitical situation, much as the election of Herr Hitler did in 1932. The Donald is showing increasing signs of personal instability and inability to cope. He might quit, be impeached or simply muddle through the rest of his time in office.

If the latter, his confrontational approach (allied to a need to galvanise his nationalist electoral base) could easily see present trade disputes turn more quickly into outright trade wars, and such trade conflicts into hot wars - if only by proxy.

The alternative – possibly a distant one – lies in creating a system of world trade managed democratically in the interests of ordinary working people, not the multinationals or investment banks. Where do indy Scotland’s best interests lie in the short term?

I incline to the Norwegian model of being inside the EU single market (for access) but outside the Customs Union, as this gives us the flexibility to protect and develop sectors deemed important to ourselves as a small nation. Bottom line: let’s ensure we get independence while there’s time to make a difference. The trade wars are on our doorstep.