Expert View: It's pork-barrel politics, and Bush's nose is in the trough

"I've got to find him." "Why?" "The US has just declared war..." (thoughts of Iran, and North Korea, flickered through my head) "...on us!" Ah! My friend was seeking out Peter Mandelson at this crowded cocktail party. The EU's new trade commissioner had just been handed one hell of a challenge. The US and Europe were at war - over trade.

Our casus belli lies in the rivalry between the two economic superpowers' aircraft manufacturers, Boeing and Airbus. They have long been at each other's throats, but last week President George Bush aggressively intervened. The US administration tore up a 1992 treaty, alleged that Airbus had received $15bn of government subsidies, and issued a battle cry: "The Airbus A-380 is the most subsidised aircraft in history."

Once more, the President is being bellicose on the back of false intelligence. A counter-suit from Europe points out that Boeing tops Airbus with some $23bn of government subsidies, including a hefty $3.2bn from Washington State, where Boeing's main plant is located. The US response, that the state would happily subsidise any big European manufacturer relocating there, rather misses the point.

Mr Bush's action is, of course, not unrelated to the US election. Senator John Kerry has been mercilessly wielding the knife against the President's weak underbelly - his record of job destruction. With Mr Kerry gaining in the opinion polls, Mr Bush clearly saw the need for a grand gesture.

It is depressing to consider how often the US, supposedly the home of capitalism and free trade, resorts to the carrot of subsidy and the stick of tariff - especially for domestic political reasons. The imposition of steel tariffs in 2002 was linked to Mr Bush's mid-term election campaign in the steel-producing swing states of Ohio, West Virginia and Pennsylvania. These tariffs were ended earlier than anticipated only after politicians from Michigan pointed out the effect on theirown, steel-buying, car industry. In Florida, that vital state in the current presidential election, Republicans boast of the tariff they negotiated on sugar imports to defend the local sugar-beet industry.

America's pork-barrel politics has reached alarming proportions. The US House of Representatives passed a bill last week totalling $136bn of new tax breaks for an array of groups from farmers and fishermen to "bow-and-arrow hunters". Stung by the Democrats' jobs jibes, Mr Bush is pushing through tax breaks for large corporations to "provide tax relief to America's job creators".

The more one surveys the trade policy of the US, the more one sees its inclination to play by the rules manifests strictly when it suits it. In areas where US commercial supremacy is established, such as IT or financial services, it argues loudly for free trade. In areas where America is losing the race, it pushes for trade barriers. Airline analysts point to Boeing's panic at the string of successful launches by Airbus, and its fear that the A380 will eclipse Boeing's, now dated, 747 jumbo.

In this climate, the US is flexing its trade muscles generally. A similar dispute, which threatens to explode, rumbles between the US and China over textiles. Likewise, Canada and the US are at odds over the latter's tariffs on lumber, where Canada previous outsold the US.

In more gloomy moments, I see the current economic conditions as a replay of the 1930s - weak stock markets followed by an increase in trade disputes. It was the protectionist President Herbert Hoover's approval of the Smoot-Hawley tariff that sparked the international trade war that characterised the Great Depression. Twelve countries retaliated and world trade collapsed.

Could this happen again?

christopher.walker@tiscali.co.uk