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Trade war with China will only harm America’s own interests

By Shubham
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    US President Donald Trump was set to announce tariffs on the import of Chinese goods on Thursday, March 22, in what constituted a move at curbing theft of the American technology and the announcement was likely to invite Beijing's wrath and a possibility of a full-fledged global trade war.

    US President Donald Trump

    Although it was not clear how the size and scope of the tariffs would be like, the US establishment said China's high technology sector was under the scanner and also the sanctions could also eye Chinese investments in the US.

    Trump has thought of raising tariffs on a number of Chinese products like steel, aluminium etc. as well as initiating a probe against Beijing's intellectual property rights activities.

    But how much of a success are trade sanctions?

    According to Ka Zeng, a political science professor and the Director of Asian Studies at the University of Arkansas, Washington's policy of pressurising Beijing unilaterally to address unfavourable trade practices has not yielded desired results compared to other countries.

    Explaining this, Zeng has written in the Washington Post that one has to understand the trade structure between the US and China to know why the former's tactic of adopting a trade war with the latter doesn't always pay off.

    US and China share a globalised trade relation today

    The first factor is globalisation. In the past two-three decades when China has witnessed rapid economic growth, the country's producers made use of their cheap labour and natural resources to boost export of labour-intensive products to the developed countries like the US.

    In return, the US emphasises on technology-intensive products in lieu of imports that it finds too costly to produce at home. This puts in place a trade relationship which is the order in a globalised world. You give some; you take some and together we gain.

    Against this background, not all companies in the US would back Trump's trade sanctions. Barring those that push for access to the Chinese market by means of ending copyright or those that are afraid of China's competition, not many would like to disturb the mutually beneficial trade arrangements with China, Trump's call for "America First" notwithstanding. For American firms that rely on labour-intensive products manufactured in China, trade sanctions would be akin to a death knell.

    Why US can't have same trade war with China as it has with EU or Japan

    Zeng also pointed out in his article that competitive trade relations with other countries maintain a national unity for the Americans and also make their stand more credible. It is because of this reason that US trade sanction threats work more effectively against partners like the European Union and Japan with which the US compete for overproduction of similar products.

    Similar business interests make all firms back their government in imposing the trade sanctions. But with a country like China with which the US has more of a complementary trade relationship, it becomes difficult to achieve a national unity for domestic firms have beneficial terms with China and they would not like to dump them at any cost.

    'America First' is a good political but bad economic slogan

    To conclude, Trump's "America First" could be a remarkable political slogan but when applied to the daily economics, it might not be as effective because of a number of factors that come with the phenomenon called globalisation.

    Trump's rhetoric cannot de-hyphenate the deeply rooted economic relations that the US shares with China and a forced sanction could eventually harm America's own interests more than those of the Chinese and reduce Washington's clout further in the international community. Post-Trump, the US's political image has taken a serious beating. It can't afford to see the same in the economic sphere as well.

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