Summary: Trump’s big promises won him the Presidency, much as Obama’s promises of “hope and change”. Here is a second article by Stratfor looking at Trump’s ability to do better than Obama at delivering on them. Will Trump fail gracefully, like Obama, or catastrophically?
A Trade War That Cannot Be Won
Stratfor, 11 January 2017.
- Protectionist trade policies toward China would do little to achieve the incoming U.S. administration’s stated goal of reviving U.S. manufacturing.
- Beijing would use various means — in particular, harassing U.S. companies that operate in China and depend on the country’s growing consumer market — to retaliate against protectionism in the United States.
- President-elect Donald Trump’s administration will likely focus on curbing Chinese steel imports, a policy that could boost U.S. manufacturing without doing much damage to China’s economy.
The trade relationship between the United States and China is a cornerstone of the global economy and a linchpin of the economic, social and political order in both countries. But in recent years, and particularly during the runup to the 2016 U.S. presidential election, the partnership has come under fire in the United States. Leaders such as President-elect Donald Trump have criticized Washington’s trade ties with Beijing as unfavorable, since China’s exports to the United States exceed its imports from it. Trump has decried the negative effects of this trade imbalance and promised to correct it, for instance by imposing a 45% tariff on Chinese imports. Despite the backlash that such a drastic measure would invite from Beijing, Trump argues that the United States is better poised to weather a prolonged trade dispute than is China, thanks to their lopsided trade relationship.
A closer look at U.S. trade activities with China casts doubt on this idea, however. Changes in the composition of Chinese exports to the United States, the structure of manufacturing supply chains and the aims of U.S. corporate investment in China have evened the field between Washington and Beijing. As each side tries to achieve increasingly contrary political and economic goals, neither would be immune from the fallout of a trade war. China has just as many options to retaliate against protectionist U.S. policies as the United States has to punish Beijing. The challenge is to understand which tactics the countries’ leaders are likely to choose — and to what end.