The United States and China are waging a commercial war. For the random commercial battles that President Trump put against the rest of the world, the conflict with China may seem small or even justified. China, after all, is an opponent. It took American jobs and threatened to drop democracy in Taiwan.
But the open conflict with one of the three largest commercial partners in America is still a significant departure from decades of American policy. Experts say this will lead to low prices and low economic growth. Is it worth it? Today, the newsletter will look at the arguments on both sides.
The case to
There are two main pilgrims for Trump's definitions by 145 percent in China.
The first revolves around the imbalance. America has bought many China over the years, and China has not returned to it. To sell things there, American companies bend back to comply with the rules of the Communist Party. Chinese companies do not face the same barriers. Consider video games: American companies must monitor their games to reach Chinese markets, if they can enter at all. Chinese developers charge their games to the United States full of pro -religious control.
Trump and his allies say the definitions will force China to negotiate friendly trade rules with the United States. China cannot bear the loss of America, its largest agent, if it wants to maintain the growth of its economy quickly. He will have to surrender and allow more American products in their markets.
The second argument revolves around national security. America depends on China for electronic chips, pharmaceutical components, and rare ground minerals. (Beijing has suspended rare critical land exports, and American companies have no alternative resource.) At the same time, China is working to weaken the United States on the world stage, and America can go to war with China if it invades Beijing Taiwan. The tariff for definitions for China forces countries to separate them; Companies will have to find other places, including inside the United States, for their source of products.
It is worth noting that these arguments – on commercial imbalances and national security – contradict each other. If the commercial balance reaches their way, the United States can trade more with China. If the national security team reaches its way, America will close China. However, the administration has achieved both points at different times.
The issue against
Trump's critics offer two main arguments against his definition – one on one foundation and the other in tactics.
Based on the advantages, they argue that the trade war with China will leave the United States worse. China has built experience and resources for manufacturing that does not have another country – with advanced machine tools, for example. So it is not possible to transfer production to, for example, Mexico or Vietnam and expect the same goods at reasonable prices. The cost of living will rise and the quality of life will decrease.
Experts argue that economic pain deserves it if the United States won the trade war, but victory is not guaranteed. If the United States is lost, it may suffer from all the pain of definitions only to end with less favorable trade conditions with China.
On tactics, even supporters of trade war with China are wondering about Trump's methods. The president increased the definitions of China to 145 percent of 20 percent in a little more than a week. But companies are not able to convert manufacturing to the United States or other countries so quickly, which means that Americans will have no choice but to pay higher prices while operating this process. If Trump has been trained in tariffs over time, companies may have left China without boycotting production.
Critics say narrower definitions can achieve the same goals. Graphics on computer chips or other parts used in military equipment can help protect national security. Fees on clothes and smartphones no. (Trump plans to impose an additional tariff on computer chips, he said yesterday.)
What next
So far, Washington and Beijing have responded to each other's definitions with more customs tariffs. But the effect of high fees is small, because the difference between the outcome of 105 percent and 145 percent is less than the eye. If you are looking for a $ 20 toaster, the distinction between $ 40 and $ 50 is not related – both are much more than you are ready to pay.
The next stage of the trade war, then, will not be operated in customs tariff ads but in stores and in kitchen tables in both countries. People in America will pay the same things, if they can get them at all, and people in China will have lower customers and earn less money. Their economies will grow slower, if not shrinking. In the end, American or China leaders will decide that they have enough negotiating peace.
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