Bloomberg is reporting that — if next month’s talks between President’s Donald Trump and Xi Jinping are not successful — the President plans to slap tariffs on “all remaining Chinese imports.” Foreign affairs expert and bestselling author Dr. Parag Khannawrote last week in Axios that the President’s disastrous trade strategy with China is already causing Asian consumers to turn away from American goods and cutting the U.S. out of the global marketplace — maybe for good. This latest news is just more evidence of this Administration’s fundamental misunderstanding of the global economy and China’s position as #1 trading partner in the global order.
According to Dr. Khanna:
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- The latest trade data suggests that Trump's trade war is not having its intended effect -- in fact, it's doing just the opposite;
- U.S. imports from China are rising as a result of strengthening U.S. economy (and growing consumption) along with a weakened Chinese currency;
- Meanwhile, U.S. exports to China have been diminished by Trump's "new Cold War" as China has sought out and secured alternative trading partners (in Asia and in Europe) to circumvent the U.S. entirely (and perhaps permanently);
- This Administration needs to keep in mind that -- in dealing with China -- it isn't dealing with a backward, isolated socialist economy with no trade. It's dealing with a country that is America's #1 trading partner after the EU and -- more importantly -- a country that's the #1 trading partner of twice as many countries as the U.S.;
- The U.S. has unleashed all of its weapons in the trade war at once -- export controls, procurement restrictions, and higher tariffs -- and given China reason to argue that the US is being inflexible and not reciprocal in making compromises in the bilateral dispute;
- Now China is demanding that the U.S. lift the ban on Chinese products competing for government procurement, for example. Historically, this tit-for-tat will wind up spurring China to further move up the value chain in areas where it has traditionally improved through foreign investment only. Thus we can expect China not to bend to US demands to slow its “Made in China 2025” drive and instead accelerate it.
- This latest news is just another display of a narrow-mindedness on the part of this Administration that is causing and will continue to cause damage to the U.S.'s position in the world and to industries across the U.S. economy.
Dr. Parag Khanna is a leading global strategy advisor and Founder and Managing Partner of FutureMap, a data and scenario based strategic advisory firm. From 2013-2018 he was a Senior Research Fellow in the Centre on Asia and Globalisation at the Lee Kuan Yew School of Public Policy at the National University of Singapore. From 2006-2015 he was a Senior Research Fellow at the New America Foundation. During 2007 he served in Iraq and Afghanistan as a senior geopolitical adviser to United States Special Operations Forces. Dr. Khanna holds a PhD from the London School of Economics, and Bachelors and Masters degrees from the School of Foreign Service at Georgetown University. He is a Young Global Leader of the World Economic Forum and bestselling author of a trilogy of books on the future of world order and the forthcoming The Future is Asian: Commerce, Conflict & Culture in the 21st Century.