This is No Way to Win a Trade War with China
There is little dispute that China engages in unfair and often predatory practices to protect and promote its domestic industries. Yet if the Trump administration’s diagnosis of U.S.-China economic relations is correct, its remedy has been roundly rejected. Most observers believe the U.S. resort to unilateral tariffs will fail to achieve its intended objectives and will harm the U.S. economy as much as China’s. Furthermore, this episode may have the negative long-term effect of strengthening China’s confidence that it will prevail in future bilateral tests of will.In public discussion of the U.S.-China trade relationship, President Donald Trump has focused on China’s huge surplus in bilateral trade—$419 billion in 2018—as proof the Chinese are “cheating” and “raping” the U.S. economy. Many economists have criticized Trump for an overly simplistic if not erroneous fixation on the trade balance as the key issue in bilateral economic relations. Senior Trump advisors, such as U.S. Trade Representative Robert Lighthizer, have instead emphasized a broader goal of getting China to address structural problems such as protectionism against foreign-service industries, state subsidization of much of the Chinese economy, state-sponsored industrial espionage and acquiescence to intellectual property theft, and forced technology transfer as the price foreigners must pay to do business in China. This approach enjoys support from businesses in the United States and elsewhere that want to break into the Chinese market.
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