Trump intensifies trade war with China
The world’s two largest economies dug in for a protracted trade war this week, with the Trump administration threatening to levy 10 percent tariffs on $200 billion worth of Chinese goods. The move came just days after the U.S. fired its first trade salvo, imposing 25 percent duties on $34 billion in Chinese industrial imports. Beijing responded with its own dollar-for-dollar penalties focused largely on American agricultural products, accusing the White House of triggering “the largest trade war in economic history.” U.S. Trade Representative Robert Lighthizer said China’s refusal to reform its trade practices—such as its insistence that U.S. companies operating there surrender their intellectual property—left the U.S. with no choice but to impose duties.
The Trump administration’s proposed tariffs could go into effect after Aug. 30, following a mandatory public comment period. Unlike the earlier tariffs, which mostly sought to spare American consumers, the new list contains a wide range of everyday products, including car tires, pet food, furniture, toilet paper, and beauty products. China won’t be able to retaliate dollar-for-dollar. It imported only $130 billion in American goods last year, compared with $506 billion in Chinese goods imported by the U.S. But analysts warned that Beijing could respond by disrupting American business in other ways, by increasing product inspections at its borders, for example, or delaying licenses for U.S. firms. “China has a million and one ways to retaliate,” said Scott Kennedy of the Center for Strategic and International Studies in Washington.
What the editorials said
After months of threats, “the phony trade war between the U.S. and China has given way to the real thing,” said Bloomberg.com. The U.S. has legitimate complaints about China, which skirts global trading rules with its heavily subsidized domestic industries and bullies foreign firms. But this tariff firefight will succeed only in harming consumers and companies in both countries. The U.S. duties mean Americans are already paying more for Chinese-made goods such as washing machines, and Beijing’s duties will raise prices at grocery stores across China. “Hostilities need to cease immediately.”
That won’t happen as long as President Trump is convinced he can win, said The Wall Street Journal. After all, the stock market has mostly weathered the trade turmoil so far, buoyed by deregulation and tax cuts. “But anecdotal evidence is growing of tariff-related investment delays and layoffs.” Trump could also pay a political price. China is intentionally inflicting economic pain on Trump supporters’ areas by slapping tariffs on products made in red states, such as soybeans, pork, corn, and automobiles. “This isn’t the ‘winning’ those voters had in mind.”
What the columnists said
Nobody panic, said Matthew Yglesias in Vox.com. Yes, some industries will suffer as a result of this trade war, but most of us will hardly notice. Consider this: The 25 percent U.S. tariffs that recently went into effect amount to a tax increase of $8.5 billion a year on American consumers and firms. That’s “not nothing, but small compared with the $150 billion per year worth of tax cuts that Congress passed in 2017.” The truth “is that Trump’s trade agenda just isn’t that big of a deal.”
It could be soon, said Paul Krugman in The New York Times. If the escalating tit-for-tat between the U.S. and the world’s leading economies continues, countries could implement tariffs of up to 60 percent, which might reduce global trade by more than two-thirds. About 10 percent of the economy is engaged in production for foreign markets, so up to 10 million U.S. jobs could be lost. It’s hard to see how things de-escalate. Trump is immovable in his false conviction that “trade is a game in which he who runs the biggest surplus wins.” Meanwhile, the rest of the world doesn’t want to give Trump “even the appearance of a win.” Things could get a lot worse.
But will that matter to hardened Trump supporters? asked Eric Boehm in Reason.com. Polls continue to show that most Republicans back Trump’s trade agenda, even though it will have an overwhelmingly negative impact on red states. “Could tribalism—or Trump’s cult of personality—be such a powerful force in national politics that it overturns one of the oldest rules in the political book: that people vote with their wallets?” We’re about to find out.