US President Donald Trump signed an executive memo on Thursday, imposing up to $60 billion in tariffs against Chinese imports and investment restrictions on technology transfer and acquisitions by China. This is the biggest trade action that the Trump administration has instituted, with a massive scale that is rarely seen, even among the history of international trade conflicts.
Though the news arrived at midnight in Beijing, the Chinese government is expected to respond quickly to defend the country’s legitimate trade rights. Public opinions have indicated that China will begin by targeting soybeans and other agricultural products imported from the US as retaliation.
China's Foreign Ministry spokeswoman Hua Chunying said on Wednesday that the two countries should not start trade war. She said that if China is forced into this situation, it will neither be afraid nor avoid it. It is fair to say that they are not diplomatic language. Instead, they should be taken as the united voice of the Chinese people that they will not be bullied.
The Trump administration has apparently misjudged this situation, due to its wrongful interpretation of a key few factors. First, the US government is wrongfully taking its own economic hardships out its trade relationship with China. Second, it is overestimating its ability to adjust international trade in the market economy’s private sectors, as well as its advantage in a trade war with China. Finally, it has underestimated China’s resolve regarding retaliatory measures, and it has not fully considered the price it will pay by starting this trade war.
There is an old, but very applicable Chinese proverb that states that “The self-conceited troops are destined to lose.” This trade war is akin to the Trump administration “playing with fire” and it will end in disaster for the US.
Trump’s attempts to impose tariffs and solve trade imbalance problems, while also reviving the American economy, is an incredibly short-sighted solution that the American people largely disagree with. In fact, the tariffs have been met with a major outcry from American citizens and businesses alike. To a certain extent, it appears that this trade war is desired and waged solely by President Trump and his team, while lacking the rest of the country’s support.
China is now being forced to fight back in this trade war. China’s society is highly united, and this will be reflected in its actions as the trade war comes into effect. China’s residents possess a level of endurance that the US cannot compete with.
Any trade war will only lead to a lose-lose situation. While both China and the US are economically resilient, one will invariably fail and that will result in political backlash. The Chinese people and American public will blame President Trump for the turmoil both countries will have experienced. Additionally, the Trump administration, along with the GOP, will suffer in the US’ future midterm and presidential elections. The trade war will be used as a major example of Trump’s failures if he seeks reelection.
China is a powerful nation and a force to be reckoned with, meaning that China will not abide deception and will not be taken advantage of. In other words, the US should not fool itself into thinking that China can be pressured to fold under such tactics.
Another important aspect to keep in mind is that China’s consumer market has surpassed that of the US and it is still expanding at a rapid pace. If a trade war were to take place, the two countries would be matched regarding the other’s strengths and capabilities.
Solving the trade deficit between the US and China is a complicated matter, requiring both sides to set aside its differences and work together. If the Trump administration is irrational enough to think a trade war will provide them some level of profitability, they are destined to fail.
Many analysts have interpreted Thursday's memo as Trump's way of intimidating and sidelining China. This tariff is just a new way to flex his muscles at the world, but he has no more leverage over China than his predecessors have had. China is on a level playing field with the US in many respects, and its consumer market shows signs of even besting the US in some areas. Trump’s famous temper tantrums indicates that his image is an act and that he is one of the most lackluster US presidents.
Washington should dismiss the idea that China will concede in this trade war because it will find no white flags to mark China’s surrender. Instead, Washington will charge blindly into a bullfighter’s red cape.