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Mike Starkey unloads soybeans from his crops in Brownsburg, Indiana on September 21st. The United States is expected to impose a $ 200 billion tariff Monday on Chinese imports. US import taxes. China has promised to push tariffs back on $ 60 billion worth of US goods. (Michael Conroy / AP)
The United States and China are at war for trade. The Trump administration and the media focus on the tactics – what tariffs are imposed on which products?
Like many wars, the United States has entered this conflict with optimism. Barbara Tuchman "The August Guns" is a classic study of the spiral of the First World War, a wave of optimism in which all fighters expected to win quickly, until they get bogged down in the war trenches. In Iraq, in 2003, the United States defeated Saddam Hussein's army in a few days and President George W. Bush declared "mission accomplished" a few weeks later.
President Trump has taken a similar approach. Trade wars are "easy to win," he said in the opening salvo. While the trade war is prolonged, it seems that the expectation of the administration to a rapid capitulation on the part of Beijing is naive. Here are the most important questions:
1. What does the United States hope to accomplish?
Trump said his goals were to open the Chinese market, reduce the trade deficit and save American jobs, especially in traditional manufacturing industries. Its strategy is to knock out China with tariffs on its products and then hit them with more tariffs when they fight back. The idea is to take advantage of the inequality of trade between the two countries to do more harm to China than it can harm the United States and win the war.
2. But does the American public favor an expensive fight?
As China prepares for a protracted struggle, is the American public committed to staying the course? The Trump administration has downplayed the costs of the trade war, asserting that a robust economy can absorb marginal cost increases for consumers and expect that other domestic and foreign manufacturers foreigners intervene quickly to replace Chinese products. The administration has rallied around the prospect of saving traditional industries from Chinese competition but has misled the rest of the country about the real costs of higher priced goods and inputs.
[Why Republicans don’t push back on Trump’s China tariffs — in one map]
As US export industries, industries that use intermediates from China and consumers are starting to feel the pain, they are already pushing for the administration to return to its positions. As in any war, solve the problems. Public support is likely to fade as costs rise.
3. How is China likely to react?
China will also suffer from this war, but its undemocratic leadership is more sheltered from public pressure. China exports more to the United States than the other way around and can not match US tariffs 1 to 1. But China should redouble its efforts to strengthen its domestic economy and seek new markets. Export influence, as in his Belt and Road initiative. Chinese exports could increasingly shift US exports to these same countries.
[Belt and Road projects direct Chinese investment to all corners of the globe. What are the local impacts?]
China's main economic threat to the United States does not really concern steel, automobiles and consumer electronics. High US tariffs on Chinese products will probably simply shift production to Southeast or Southeast Asia, areas where labor is still relatively abundant and can compete with US workers . Indeed, officials of the Trump administration are already trying to ease the pain of tariffs by saying that Chinese production will be replaced by an increase in imports from Vietnam and other countries. But it is unclear how this will save jobs in the United States.
The real economic competition between the United States and China is in the industries of the future – robotics, artificial intelligence, biotechnology and more. The Trump administration seems to believe that the trade war will prompt Beijing to give up the Made in China 2025 initiative, which aims to improve its technology to compete with the United States. The opposite is more likely. By losing access to the US market and US technology, China will aim to develop its own technological base even more quickly and then begin to subsidize and sell its products in the markets that the United States previously dominated.
4. How will this trade war unfold … and end?
Even if the United States "wins" in the short term the trade war with China making concessions allowing Trump to declare his victory, the United States may lose in the long run while China strives to reduce its dependence on the American market. improve its technological capacity.
[Worried about tariffs? Trade blocs are the real danger to the U.S. and China.]
But the United States could still change course. The Trump administration insisted on leading this war solo. As in most wars, a more effective strategy might be to rally our allies, in this case all the other countries that have legitimate complaints about China's economic policies. With a united front, China will find it harder to compensate for its exclusion from the US market by turning to others.
The United States and China also have effective procedures for resolving disputes and avoiding the costs of war. The World Trade Organization, despite all its weaknesses, has clear rules on trade and a mechanism for resolving complaints of unfair practices. The WTO mechanism allows the US government to respond to violations of international trade rules by China.
Other issues, particularly investment and forced sharing of technologies, are not covered by current WTO rules and will have to be negotiated directly with China. Having demonstrated its willingness to confront China with trade, the Trump administration could declare a cease-fire, do the diplomatic work necessary to form a coalition of like-minded states that oppose China's unfair practices, negotiations on investment issues not covered by existing agreements.
This seems like an opportunity – or the last chance – to withdraw from the war, which will not only be costly in the short term, but which, if it goes as planned, should not lead to a long-term victory for the United States. United. .
David A. Lake is Professor of Social Science at Gerri-Ann and Gary E. Jacobs and Distinguished Professor of Political Science at the University of California at San Diego.
Jessica Chen Weiss is an Associate Professor of Government at Cornell University. Find her on Twitter at @ jessicacweiss.
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