Article Link: "China Once Looked Tough On Trade. Now Its Options Are Dwindling."
China has exponentially increased their control over the world's economy which has led to numerous actions by President Trump to limit this rise of economic power. Thus, Trump has decided to retaliate repeatedly with tariffs placed on China's exports thus making them less appealing to the consumers in the US which, ultimately, leads to the decrease in demand for China's goods as they are more expensive than American made ones or other imports. Recently, Trump has proposed his final plan to place 10% tariffs on "$200 billion a year of Chinese goods." This tactic to place tariffs on China's goods has consistently hurt China's economy, and they cannot retaliate to the same caliber since they do not purchase/need merely as many US exports. Moreover, as the US restricts China's economic potential through tariffs, China is very limited in terms of which actions it can take. China cannot simply encourage the closing of certain factories or the boycott of US goods because this can taint their reputation as a good country to do business with and possibly remove many workers from employment. Moreover, completely surrendering to the tariffs imposed by the US would lead to the Chinese public thinking their government has seized to fight back. Although China still is being hurt by the trade war, the US could also be injuring itself through making businesses pay for the tariffs of necessary goods which could lead to a decrease in support for Trump even though a majority from both parties agree with his trade tactics. Finally, the most recent rejected solution from the Chinese government proposed that tariffs would be based on "proportions of trade" which would mean the fraction of tariffs imposed by the US would be equal to that imposed by China. This would allow the US to still restrict some of China's economic growth as well as granting China the ability to stabilize its economy once again.
This trade war has been part of Trump's numerous tax reform plans which has led to an increase in the polarization in the US since some people completely support him while others do not. Moreover, if it persists, this specific trade war could deteriorate a major section of the globalized economy. It could lead to a decrease in economic relations between the US and China which then lead to less services at higher prices thus creating a chain reaction that forces many Americans to spend money which they did not spend before thus putting some Americans in debt. This trade war could also lead to the willingness of other countries to dissociate from relations with the US and/or China.
Ultimately, I think that the trade war is impractical and there are many more effective ways to limit the rise of China's economic power. Trump could simply retain the tariffs rather than increasing or threatening to increase them as this already restricts China's economic growth potential. Moreover, China consistently refuses to take the high road as their "hard-liners" want to retaliate evenly to the US' actions which contributes to the impracticality of the situation. Furthermore, although many pro-American businesses may be happy with the trade tactics, if a compromise is met, many Americans could possibly lose their jobs as the need for American workers will decrease since more Chinese goods can be bought meaning that less American goods are needed. On China's side, I was surprised that their government rejected the plan to make tariffs based on trade amount rather than the dollar value. This would ensure that their currency is not inflated which could help them in the long run.
Discussion Questions:
1. If neither country agrees to a compromise, could this trade war lead to a bigger economic dispute which hurts the globalized economy? Why or why not?
2. Since China cannot boycott or encourage the closing of factories to avoid US economic relations, what are some solutions that China can take so that they can maintain their economy while satisfying the US?
3. How has the trade war affected Trump's popularity? If Trump is not reelected, do you think the trade impositions like tariffs on goods will remain? Why or why not?
4. Besides more tariffs, what are some alternative actions that Trump could have taken in order to control China's economic rise?
Even if an agreement is not reached, I do not believe this trade war could lead to a larger economic dispute. I believe both countries know that raising tariffs will hurt each other's economy so I think that eventually both will stop raising them. Once this happens, I believe negotiations will begin and the situation will deescalate. Because China is so large, I do not believe that having reduced trade with the US will change their economy too much. The trade war had obviously hurt Trump's popularity because the benefits of increased manufacturing jobs in the US are outweighed by the increased cost of goods. If Trump is reelected, I do not think Trump will change his stance on this issue. Instead of putting up more tariffs, Trump could have just accepted that China would have put up their own regardless of what he can do.
ReplyDeleteI agree with Jason, that I don't think there could be a bigger economic dispute other than continuing to raise the tariffs on each other which would only hurt each other and their economies. I don't think there is much that China can do to avoid US relations without having impact on their economy even more. His decision on the trade war has affected his popularity because many people don't agree with his actions, especially because it has had a negative impact on the economy.If Trump is reelected his position on the tariffs will not change. I feel that Trump can not and does not hold the position to control China's economic rise because it is a foreign occurrence that has not posed a threat to US prosperity.
ReplyDeleteAll though not everyone is happy with Trumps decision with the trade war, I do not believe it will or has changed his popularity. People either have been seeing his so far presidency and have supported him or just avoided him all together. And I believe that these trade impositions like the tariffs on goods may not remain forever especially if a more liberal president gets elected. They both understand that these tariffs will slowly hurt each others economy to a point where both sides will stop them all together. It is just a matter of time.
ReplyDeleteThe trade war can escalate to embargoes that can easily damage the economic statuses of the US and China. This economic stress can then radiate to dependent countries. China should focus on developing other trade deals that are more directly beneficial. Alternatively, Trump could focus on reducing the occurrence of outsourcing manufacturing of American companies' goods in order to limit China's economic rise. Companies like Huawei that bolster China's growing economy primarily exist due to the carelessness of American companies.
ReplyDeleteI agree with Jason, that this tariff will not lead to a larger economic dispute in the sense that both China and the U.S are too large countries that will be able to manage without a constant economic dependency on each other. Even though this could ultimately affect American and Chinese relations I believe that extraordinary measures would have to be taken in order to make a significant damage. As for President Trumps popularity, I do not believe this will have a compelling effect on the matter. As mentioned, the polarization of Americans agreement or disagreements with the President will most likely align with this issue as well. Those who have previously agreed with the views and beliefs of the President will continue to support him regarding the matter while those who have opposed his policies and opinions will continue to do so. The President is trying to do something regarding America's economy and whether it has a positive or negative impact we will find out in the near future, but I do not believe this tariff will have a strong negative impact on the economy.
ReplyDeleteI think that pretty much nothing will drastically impact the popularity of Trump. He already has established a group of followers that will love him no matter what and another group that will continue to hate him. So despite the fact that the policies that Trump has proposed regarding trading are controversial Trump's popularity won't really change.
ReplyDeleteRichard
DeleteI believe that this trade war can very possibly lead to a negative affect to both America's and China's economy. This could also lead to a divide in the world between other countries who are being affected by this trade war. In my opinion, China should focus on trading for things that could be beneficial to them instead of trading just to grow into a world power. On the other hand, Trump could institute more changes like improving many of America's manufacturing businesses to improve our economy and ultimately, weaken China's, stopping their rise and ending the trade war. However, the Trump Administration should be careful by watching for our own economy because it is very possible to strongly affect our economy if this trade war goes bad. This war could also lead to more and more conflict between America and China, and even other countries, which could start a real war. This option should be avoided unless necessary. I do not think that this tariff is going to have any effect on this issue and if Trump is doing this for popularity, it will not work since the tariff will not be effective.
ReplyDeleteA continuing trade war may not damage the global economy too much because apart from the participants of America and China (in this specific trade war, neglecting all the other ones) other countries will continue to purchase Chinese goods without their prices being affected too much, however China and the US are cornerstones in the global economy and economic unrest caused by tariffs in either of them could have a significant impact in the global economy. China can maintain their economy without the US by expanding its trade to other countries, especially African nations, because China has recently been making a strong effort to build alliances, and even if they have to sell these products at a loss in Africa, it could be invaluable diplomatically. The trade war may be raising Trump's popularity in the short term because people see it as him taking action, but as it continues, the American consumer will feel the hurt on these newly raised prices that they will have to pay for. It's totally unforeseeable whether Trump will continue these tariffs but it's possible. Other ways to control China's economic rise would have been promoting industry in other developing countries as locations where even cheaper labor exists, and cheaper products can be made. We could also reduce the American market through recycling and reuse initiatives that would reduce the amount of good we'd have to buy from China.
ReplyDeleteThe trade war, although seemingly big, will not impact much of the world except for America and China. Neither Trump nor Xi is correct in imposing these tariffs and following up with their actions. As the Chinese economy can be said to be entirely made up of exports to the United States, there are also many other places that are major consumers of Chinese products such as Asia and Europe (Hong Kong follows up behind United States as one of the biggest importers of China goods). The Chinese tariff would not impact America much, as they import very little of American goods. It is normal agenda for a country to wish to increase their economic growth and to spread their goods to the world. Ultimately, because Trump is pursuing his own agenda, the people of the United States will suffer for it, paying more for chinese products that were once cheap and plentiful for people.
ReplyDeleteI disagree with Richard: I believe that there are many actions that Trump can take that can lead to decreasing support from US citizens, and this is certainly one of them (even if it may not be a significant number). Sure, partisan divide is strong and so is party loyalty, but many still follow Trump's policies, and his disapproval rate has increased. Furthermore, I do believe that this trade war can affect the world economy because China and the US are both powerful world economies and are connected throughout the world. Changes that are meant to affect these powers will inadvertently affect others.
ReplyDeleteI think that this trade war could have major ramifications for the global economy. The United States and China are both major economic powers, and if they purposely attempt to hurt each others economy, everyone will feel the effects. I believe that this would lead to higher import tariffs on other countries by the US, in order to maintain their economic power and mitigate the effects of losing China as a profitable trade partner.
ReplyDeleteI believe that this trade war will not cause any economic effects outside of these two countries, as the tariffs imposed are only on the United States and China. If the tariffs were allowed to escalate to absurdly high levels, then the global economy would most likely feel it, but that would require both leaders to make some very bad economic decisions that I do not foresee happening. I feel that these tariffs have most definitely hurt Trump's popularity, as the result of these tariffs have done nothing but hurt the everyday consumer. Ultimately, the everyday consumer does not care about the economic threat that another nation might pose, but what the everyday consumer does care about is how expensive the cost of their goods are. By raising the costs of these goods, Trump's popularity probably won't be increasing dramatically.
ReplyDeleteWhile this round of tarriffs may be hurting China's economy, it could possibly help other developing countries who will replace China as the major producer of US-imported manufactured goods in the future. Despite being possibly able to help the rest of the world, I doubt the tarriffs Trump imposes would really gain anything for the US. It could have wide ramifications across the US, for while it may not economically disadvantage US, it would have significant social impacts, particularly on those who aren't as fortunate. Because prices of US-manufactured goods are often priced higher than those manufactured from China, it would cause businesses to increase their prices, and thus citizens would have to pay more than they can afford and really need to purchase, possibly dragging many below the poverty line. If the repercussions and harm towards US citizens is really this bad and Trump does not get re-elected, I believe that trade impositions like tariffs on goods will not remain, or at least not this severely. However, one tactic the US could have done was to impose tariffs while having companies outsource to other countries, which leaves the cost low while harms the Chinese economy.
ReplyDeleteI agree with some of my fellow commenters that the trade war definitely has the potential to create a great global dispute that affects the entire world. While the US and China are the primary participants in this war, there is a potential for their decisions to have a huge impact on other countries around the world as Noah mentions in his article. Since China and the US are two of the top and most powerful countries in the world, their influence and actions will definitely have an influence on other smaller countries when it comes to trade. To solve this issue, I don’t think that anything will be more productive besides negotiations and face to face discussion. Both countries want something that can really only be solved safely and peacefully with compromise. Touching on Trump’s popularity, I think that while his trade policies and tariff decisions did somewhat affect his popularity, I don’t think it had a significant influence because people that support him will have many reasons to and this small decision isn’t enough to sway that believe, for the most part anyway.
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