Trade Wars vs. Trade Conflict

In a post entitled "Preemptive Unilateral Disarmament," Paul Krugman is upset that Secretary Geithner doesn't want a "trade war":

So, why did Tim Geithner feel the need to declare,

We’re not going to have a trade war; we’re not going to have currency wars. I don’t know what that means, but people are saying that.

I suspect that he was trying to reassure the markets — but if we’ve learned anything lately, I hope it is that actions, not talk, matter.

And look, if China continues on its present course, eventually we will have some serious currency and trade conflict. Furthermore, we should.

All Geithner did here was signal to the Chinese not to worry, U.S. officials will keep making excuses for China’s behavior and doing nothing, regardless of provocation. Remember, this statement comes after China blatantly reneged on earlier promises about the exchange rate. They must take us for fools — because we (or at least some of us) are.

The term "trade war" gets thrown around a lot in the media.  Like Secretary Geithner, I'm not sure exactly what people mean by this.  As the Dictionary of Trade Policy Terms (2nd edition) defines it, "Trade War" is "a journalistic exaggeration for periods of major trade disputes between important trading partners."  That sounds about right to me.  It may be that there is an older usage of the term to describe a situation where two countries take actions such as rasing tariffs on quotas on each other's goods, without concern for international trade rules prohibiting these actions.  I'm not sure this kind of thing would happen these days, though.  In today's world, I think that, for the most part, "trade wars" have given way to "trade conflict," which are disagreements over domestic laws affecting trade that are handled through international trade rules and their dispute settlement processes.  What I see Secretary Geithner as saying is something along these lines:  "We're not going to slap 30% tariffs on China in response to their currency policies; that would violate WTO rules, and we don't believe in the 'trade war' approach to trade conflict."

He also said the following:

"A substantial fraction of the Chinese leadership understands it is very important to them economically to let this exchange rate move," Geithner said at a public event.

"I think they also understand they have a huge interest in trying to make sure that they're able to continue to enjoy access not just to our market on favorable terms, but access to a global market that depends a basic sense that people are playing with a set of acceptable norms," he said.

"I believe we can manage this thing in a way that helps us make progress going forward," Geithner said, noting that China's yuan has risen at a more rapid pace since Sep. 2.

"If that would continue, I would think it would make a really material difference on their economics and our economics," Geithner said.

It is important at this moment in the global economic recovery that the United States and China continue working together through forums such as the Group of 20 nations and the International Monetary Fund, he added.

Geithner avoided taking a position on the House bill which must also be approved by the Senate to become law.

But he said it was essential any legislation be consistent with world trade rules and provide more benefit for the United States than risks.

It's not completely clear to me what actions he thinks should be taken and how much "trade conflict" he is willing to pursue.