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The nascent trade war between the United States and China is not impossible to stop, it is just that there is no clear way to go about it. put an end to it – especially because what President Donald Trump wants from all of this is not obvious. China is ready to give.
The United States, shortly after midnight on Friday, put its threat into effect by imposing very high tariffs on Beijing, imposing a 25% customs tax on $ 34 billion worth of Chinese goods imported into the United States. . China responded with tariffs of $ 34 billion on imports from the United States.
Tariffs and counter-tariffs mark the beginning of a trade war for which there is no obvious end. The worst case: The result is a series of measures and countermeasures that could have a major negative impact on consumers and global economies. Best case: The parties reach an agreement, and that ends
I asked several experts if the commercial impbade between the United States and China still had a gap or if we we headed for an unstoppable and lasting trade war. The general consensus: There is always a ramp off, but it's complicated. It's unclear exactly what the two parties want, perhaps the United States in particular, and now that the day has begun, neither side wants to look like a loser to get out of it. Until here, neither one nor the other feel the pain too much, but they could do it.
"The general answer is, of course, that there is always a way out of these things," said Edward Alden, senior fellow at the Council on Foreign Relations. "But it is very difficult with the Trump administration to understand what these transactions might look like."
Complete answers from Alden and 10 others, edited for clarity and style, are below.
Michael Froman, Fellow of the Council on Foreign Relations and former US Trade Representative under Obama
There is always an exit ramp. Both parties need to know what it is, with specificity, they really want things to be accepted and that is what the other party – with the pressure – can finally accept. But if they reach an agreement, there is always a way out of this kind of "tit-for-tat" trade action.
That said, if we look back, once the rates are in place, they tend to be pretty sticky, and voters start defending the tariff itself. We, the United States, have a 25% duty on imported trucks dating back to the 1963 "Chicken War" with the European Union, where the European Union prevented our chickens from selling themselves and in retaliation, we imposed tariff on the trucks. And that continues today.
So, there is always a ramp off, but it takes a concerted work on both sides to prevent these rates from becoming a more permanent feature of the environment.
Scott Kennedy, Project Manager on Chinese Affairs Political Economy at the Center for Strategic and International Studies
The trade war has already begun. Essentially, it was set in motion last year, and [Friday] it took a big step forward by charging $ 34 billion in each direction. In two weeks, each party will add $ 16 billion more. So, it's already started.
Is there a ramp off? Maybe, but it's very far on the road. We will not be coming to this exit until some time, until both parties feel enough economic and political suffering to decide that they have an interest in it. have a solution to this problem. Currently, both sides think that going ahead with commercial hostility is a better choice than negotiating.
Chad Bown, senior scientist at the Peterson Institute for International Economics and former commercial economist under Obama
war with China has no end in sight. There do not seem to be any plans for negotiations, and her administration has not explained what she hopes to achieve by causing this crisis. So we end up with the cost of Trump's tariffs, the resulting retaliation against US farmers, the worry of further escalation, and no clarity on what's going to follow.
Mark Wu, Professor of Law at Harvard
At present, we are still at the beginning of a trade war. Both parties test the resolution of each other. The question is whether one or the other party will blink, or if they will continue to engage in a form of climbing. Until now, the magnitude of trade affected by the $ 34 billion tariff is not huge; both economies believe that they can withstand the negative impact in the short term. Neither President Trump nor President Xi can afford to appear weak in their national constituency. Everyone painted the actions on the other side as unreasonable. But in the end, both leaders realize that they need the cooperation of the other on a wide range of other non-economic issues. In this context, each side measures the probability that the other side will yield more.
Whether this becomes a sustained conflict or that we reach a negotiated settlement: (a) how much the Chinese are willing to offer in terms of concessions, and (b) what the Trump administration ultimately finds acceptable. Until now, both are not clear.
The current trade conflict between the United States and China concerns two major sets of problems. The first is the lack of reciprocity in terms of tariffs, market access and investment. China has already made concessions in this area, notably by opening up particular service sectors, reducing investment restrictions and offering to buy more American agricultural and energy products. Such concessions can be made to align with China's overall economic reform agenda. The problem is that there is a second set of problems, which concern technology transfer and high technology industrial policy, including the Made-in-China 2025 initiative. The United States has demanded that these programs be dismantled because they unfairly disadvantage foreign companies, but China sees them as critical for its plans to turn the country into a high-tech powerhouse. On this second set of questions, up to now, there has not been much compromise.
The United States is betting that Chinese leaders will ultimately feel threatened with offering more concessions on both issues, especially if a trade war is undermining China's ability to carry out its own trade agenda. reforms. China, on the other hand, thinks that it is unlikely that US leaders will have the stamina to bear the political and economic costs badociated with protracted conflict and that they end up by being content with a deal much less important than what they require. As is often the case at the beginning of any war, both parties seem confident enough that the other side will blink first. Until that changes, we are likely to experience more fireworks to come.
Joshua Meltzer, Principal Investigator in the World Economy and Development Program of the Brookings Institution
There is always a possibility of release. I think the problem is that we do not know what this ramp looks like. The administration and Trump have not articulated what is realistic and what China could do to get the US to stop imposing tariffs.
China offered [to make some changes]. There were early discussions, and they offered to buy more agricultural products and more energy products. In the pattern of the types of problems that the United States has identified and that have problems with China, as they have been exposed in the Article 301 report, these types of measures are not enough. [Section 301 of the Trade Act of 1974 allows the executive branch to respond to unfair, unreasonable, or discriminatory trade practices]
I also do not think that at that time, the administration had elaborated itself what it necessarily wanted from China, and it gave contradictory messages about what she needed. China was therefore very confused as to what the US administration was looking for, and I think it continues today. There has been no clear statement from the administration on the kind of results or changes that China wants China to make. At this point, it is unclear what a negotiated outcome would look like. Both countries would like to find a way to get out of it, but the way the administration has put it in place so far makes it very difficult to get on with it. to end it, at least in the short term.
Todd Tucker, colleague and political scientist at the Roosevelt Institute
There are absolutely still exit ramps.
Given the highly transactional nature of Trump, China could offer up to buy more US agricultural products and further help North Korea, and then Trump could declare a victory and denounce the whole thing.
In addition, the longer trade tensions last, the more you will begin to see job losses and other observable pain in politically important states. If Trump tries to neutralize the effects on, say, diminished agricultural exports through the Commodity Credit Corporation of the Roosevelt era, Congress will eventually have to accumulate money to help cover losses of the CCC. Senators from the agricultural state like [Iowa Republican] Chuck Grbadley have indicated little enthusiasm for this idea. Republicans may have to be dragged kicking and screaming by providing control, but this could eventually happen. This could then allow a medium-term road exit
Edward Alden, senior fellow at the Council on Foreign Relations
This is a good question, and it's the one everyone poses in this moment. We are all trying to get back to history and, if you look at modern history, there have not been so many cases where the US has imposed this kind of import duty. And when that was done, it was always clear that the United States wanted to lift tariffs. There was a clear demand of a kind.
To take an example, against Japan in the 1980s on semiconductors. The United States imposed 100% import duties on Japanese imports of semiconductors worth $ 300 million, and the [was] target was very specific: Japanese had to buy more American semiconductors. In fact, the United States asked for market share goals – we want 20% of the Japanese market, and the dispute ended because the Japanese agreed. So it was reasonably simple.
There were other trade disputes where the demands were a bit more complicated, but it was always clear what the deal would look like. The difficulty in this case is that no one really knows what the agreements to end this conflict will look like.
With China, the United States has set their overall goals, which are a substantial overhaul of the Chinese economy, but nothing more specific. With the Europeans, it is unclear what the United States wants to do to reduce steel and aluminum tariffs. The Europeans are trying a variety of things – maybe we can restart the trade negotiations, maybe we can reduce car rates – but there has not been a positive response from the administration.
The only place we saw this NAFTA administration, and of course, NAFTA did not really go very far. The United States has asked for a lot of important things and, until now, Mexico and Canada are not in agreement, and the talks are stalled.
The general answer is, of course, that there is always a way to get out of it. there is always a market to do. But it is very difficult with the Trump administration to understand what these transactions might look like. This is what worries us all, is that the result of all this will be simply an escalation. We know what the next steps are – a barrel is already locked and loaded in two cases, auto tariffs and an additional $ 200 billion for China.
We know what will happen if they can not make a deal, and that is much more important than what happened right up to here.
Simon Lester, Associate Director of the Herbert A. Stiefel Center for Trade Policy Studies at the Cato Institute
In my opinion, there is a ramp off, but it is unclear if the Trump administration is ready to do it.
Some people believe that the Trump administration is not really interested in an agreement, and has just sought excuses to impose higher tariffs. If that is the case, the trade war will continue and perhaps intensify. However, others believe that the administration threatens and imposes tariffs as tactical bargaining. If it is correct, there is a chance that the voltages will go down. It depends on a few factors.
First, there is the question of how the American public reacts to US tariffs and Chinese retaliation. If enough consumers and businesses are injured and complain, the administration may have to back down. Relative to this is the performance of the economy. Fees will hurt a number of sectors, but it may take some time to appear in the economic data. When this happens, the administration may have to step back a bit.
Second, if the Trump administration decides that it is ready to back down, the US and Chinese negotiators will have to craft an agreement allowing both parties to declare victory. The Trump administration is so involved in this fight that it will look silly if it removes the tariffs without getting anything in return. Negotiators will have to find sufficient Chinese concessions for this purpose. And on the other hand, the Trump administration will have to give China something, so that China is not perceived as a crackpot of American intimidation.
Another factor is whether the administration continues to oppose trading partners other than China. Most trade experts agree that a better strategy for addressing Chinese business practices is to work with other countries as part of a multilateral effort. Until now, however, the Trump administration has spent more time attacking the business practices of these other countries than trying to organize a coalition against China. The way in which the administration approaches the trade with other countries could have an impact on the United States-China dispute
Chin Leng Lim, professor of law at the Chinese University of Hong Kong
We must accept the reality of additional tariffs while we are working toward a settlement between Washington and Beijing, and we should simply let the questions on tariffs go to the International Trade Tribunal.
There was a trade logic of controversy. If a country has a large trade surplus and punitive tariffs are imposed on it, it's just to make it swallow. Trump wants a refund for China's trade surplus, China is more than willing to negotiate, but Trump wants its restitution to be right. He also wants to hit China with tariffs, and – according to this old logic – he wants China to beat its tariff. Beijing, however, says that if there will be a settlement, there will be no Trump tariffs and quotes the current global rules.
Let me first point out that what Trump wants is not new. Trump's tariffs reflect how the United States used its arguments in favor of trade before the World Trade Organization resulted in a more fragile regime that worked for nearly 25 years. Quoting the WTO rules does not respond to Trump's visceral rejection about the WTO
It's because Trump knows that his demands go beyond what the company does. WTO can offer. In about 20 years, we have used the WTO to open trade with China through China, and then use it to justify tariffs against Chinese products and force China to sell its own industrial raw materials. What the global regime can not handle is the existence of mbadive trade surpluses. There are no rules for that. And what the WTO can not do, is to make sure that China buys more because the WTO has not just worked in this important way. The last time a round of global trade negotiations opened successfully, it was in 1994, before the WTO. That's why Trump now wants to go back in time, to the system we had before 1994.
So here's how the June agreement failed. China says it is willing to buy more and proposed to halve imports on a pile of products worth about $ 70 billion. But he said that there will be no agreement if Trump follows the tariffs. Trump's logic prior to 1994, however, requires that tariffs be in place and, more importantly, a system where the United States can impose tariffs whenever necessary, unilaterally. This is for Trump the only tool he has to open the Chinese market. It's the Trump Reset Button
But Beijing wants to preserve the WTO and the traditional American allies to help preserve this home that America has built.
In short, there is an exit ramp before 1994. "Although Beijing can not consider rejecting the benign instrument of China's own rise and development, which other nations can benefit from, Trump sees this as an unfair machine.And he is adamant.
Marc Busch, Professor of International Commercial Diplomacy at Georgetown University
This is not the new norm. Trump's negotiations are far from clear, the United States, like Europe, have legitimate concerns about China's lack of intellectual property enforcement.This does not mean that Article 301 tariffs will do a lot of good in this regard, but Trump is right to say that there is a real problem, and China feels more pain in these tariffs than the United States but China's threat to escalate with barri nontariff res, as the regulatory measures, should greatly worry Trump. In short, there are reasons to negotiate.
Keeping in mind the business calendar of both parties in the WTO, as well as the midterm elections in the United States, this could easily be done at the end of the year. ;autumn. One question is whether Trump can politically distribute enough exemptions to US companies looking to be spared by the 301 tariffs. Otherwise, look for national political opposition to come up, alongside those who are already aggrieved by the tariffs of article 232 [on steel and aluminum].
I am very concerned that all this will mean for the future of the Trade Promotion Authority in the United States, a provision that gives more credibility to this president and future presidents to negotiate preferential trade agreements. While I admire Congressional efforts to recover the authority on Article 232, for example, I'm afraid that there is a slippery slope here. In 2007, Nancy Pelosi demanded concessions from President George W. Bush on the Trade Promotion Authority, and this recent episode of congressional anguish, while well placed, could do much more damage. This would leave the US even further behind in the race to sign preferential trade agreements
Matt Gold, Professor of Law at Fordham University and Former Deputy US Trade Representative
The Chinese will probably not negotiate with President Trump. imposed retaliatory tariffs and national security tariffs on Chinese goods in violation of the WTO rules to which the United States, China and 162 other WTO member countries are bound. In the area of trade diplomacy, governments will not negotiate to prevent a country from taking illegal action against the WTO for two reasons.
The first reason is illustrated by the two men entering a car dealership. The first guy tells the seller if you do not lower the price of this $ 2,000 car, I'll take my money off the street. Second guy said to the seller, if you do not lower the price of this $ 2000 car, I will break your legs. The first is negotiation. The second is extortion. Why? Because the first type threatens to do something that he is legally entitled to do. The second threat is doing something that he's not legally allowed to do.
US retaliatory rights are illegal under WTO rules because President Trump has not followed the WTO retaliation process to which the United States United States are legally required. Following this process would have ensured that China would not have retaliated against our retaliation. Instead, China would have negotiated a solution during the process, or we would have finally obtained the legal right to fight back. President Trump's unprecedented refusal to follow this process prevented the Chinese from negotiating, guaranteed that they would retaliate against our retaliation and undermine all the global trade agreements on which the global economy rests.
The second reason is illustrated by the guy and his 12-year-old son entering the TV shop. The guy pays the owner $ 800 in cash for a television. But when he and his son try to take him out of the store, the owner and a security guard stop them. "I own this television now," the guy says. "It's okay," says the owner. "You paid $ 800, so you have it now, but you have to pay me $ 800 more if you want it out of the store."
What are the chances that the guy, in front of his son, is going to just pay $ 800 more? Enough zero. He will call the police when he thinks they will be effective. He will try to get out alone if he thinks the police will not be effective. But, there is virtually no chance that he will just come into his pocket and pay a second time. China had previously "paid" the United States by making concessions to the United States in exchange for which the United States accepted the obligations set out in the United States' Memorandum of Understanding on Dispute Settlement. WTO, which forces us to follow the retaliation process. China has also "paid" the United States by granting us concessions in exchange for the obligations of the General Agreement on Tariffs and Trade, Articles II and XX, which prevent the United States from continuing to trade. impose recent national security tariffs on the Chinese.
Thus, President Trump tells China that even though the Chinese have already paid the United States to badume certain obligations, they must now pay us again to enable us to fulfill these obligations. What are the chances that China will just sit down and negotiate the amount that it will pay to guarantee the performance by the US of the obligations that China has already paid? As a former US trade negotiator and leading expert in this part of international law, I can tell you that it's pretty much zero.
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