It’s a damn but predictable shame. Trump’s tariffs and defamation of China has squandered the opportunity to contain China’s economic dominance, military buildup, adventurism in Southeast Asia and, yes, to negotiate a win-win trade deal with Beijing.
China represents 27 percent of the of the world’s production, but only 13 percent of its global consumption. Its domestic economy can no longer consume enough to absorb all China produces, so it needs to increase its exports.
But it can’t if other countries maintain or increase their production to compete with Chinese exports, or if America leverages its enormous buying power to purchase more from other countries and less from China and creates a cooperative strategy with other countries that enables more production of goods to compete with Chinese exports.
It would have worked. America’s trading partners recognize the opportunity arising from China’s growing dependence on exports. And, coupled with concerns about China’s dominance of global manufacturing supply chains, more countries would have been likely to align their trade policies, such as tariffs and technology export controls, with Washington’s.
But Trump crushed the opportunity with his punitive tariffs, his trashing the trust of our trading partners and their willingness to cooperate, his tendency to make decisions without the advice of qualified experts, of whom he has none, and out of anger — all to fulfill his unkeepable promises that gulled his MAGA followers. Worse, the alienation of our trading partners is likely to generate self-protective strategies among our trading partners like building ties with Beijing to offset the risks of relying on the U.S.
Moreover, Trump’s tariffs are likely to backfire as they did in 2017 when they put pressure on corporate profits, lead to job loss, weaker wage growth and lower consumer spending (which accounts for 72 percent of GDP). China adjusted by replacing US imports with goods from other countries. It found suppliers in Canada and Brazil for soybeans it used to buy from U.S. farmers. Two thousand U.S. pecan growers saw their sales hit by Chinese retaliatory tariffs which cut U.S. sales to China from 460,000 metric tons to 170.
Obama and Biden tried to contain China through multilateral approaches like the Trans-Pacific Partnership (TPP) – a trade agreement with eleven pacific rim countries that excluded China, eliminated 18,000 tariffs on made-in-America exports, including every type of American-manufactured and most agricultural products. TPP also provided for stronger labor standards in Asia and environmental protections that put state-owned enterprises on a level playing field with U.S. businesses, particularly small businesses that make up 98 percent of U.S. exporters.
But Trump took an uninformed and I’m-in-control-now approach and, disastrously, exited TPP, apparently without knowing what was in it – not surprising for a man that doesn’t read. China stepped in and replaced us with trade agreements with the TPP members we abandoned and excluded us. It left China free to bully its neighbors, which sowed distrust of America in the region.
Although President Biden restored some of it, will return now that Trump is in charged.
