The Trump White House has announced plans to place a new 10% tariff on over $200 billion worth of Chinese imports. This comes as US officials are reportedly frustrated at the process of negotiations with China on existing tariffs that went into effect last week.
While the proposals invited the US business community to debate the tariffs before they are implemented, the US Chamber of Commerce and a plethora of other US businesses groups have already condemned both the letter and spirit of the new tariffs.
Most curiously, while the tariffs were initially reported as an attack on the Made in China 2025 initiative for ultra-hi tech production techniques and innovative product design and creation, the actual 200 page list of products the US released as potential targets of the new tariffs are primarily limited to agricultural goods, sea food and raw materials.
Therefore, one can conclude that Trump and his colleagues are harbouring a mindset wherein they believe that if they use tariffs to effectively block China’s exports of basic agricultural products and raw materials, that somehow China will not be able to fund its Made in China 2025 programme let alone the accompanying Created in China initiative introduced late last year by President Xi Jinping.
While Trump’s tariffs, like all tariffs will have a negative effect on the industries directly targeted, if Trump thinks that the primary source of funding for Made in China 2025 and the larger push for innovation and entrepreneurialism of the Created in China initiative will somehow be hit by these tariffs, he is very much mistaken. China has organised methods of funding and logistically supporting its new drive for innovation that are not dependant on the sale of frozen fish to US consumers. Instead, China’s future industrial and entrepreneurial development is funded through a vastly more sophisticated manifold finance chain whose economic engine is already transforming the nature of the Chinese economic superpower. The budgetary funding for China’s hi-tech revolution are as proverbially ‘ring-fenced’ as Trump’s much vaunted defence budget is in the United States. Just as China’s proposed counter-tariffs will clearly impact on the American consumer, American jobs and multiple US industries – one place this will not be felt is the US defence industry which especially under the Trump Presidency has its budget more carefully guarded than any other domestic industry.
But aside from a failed strategy of thinking that in targeting multiple low-tech industries that somehow China’s hi-tech and innovation revolution can be derailed, Trump has also failed to grasp that his trade wars are not just conflicts with China, Canada, the EU, Mexico, Japan, South Korea or India, but with modernity itself.
Today’s interconnected world necessarily relies on free trade to both elevate living standards and create jobs. This is why China’s One Belt–One Road initiative is designed to give nations the tools they need to engage in free trade in a manner that is specifically tailored to expanding a given country’s existing areas of excellence by opening up new trade routes and markets for a nation’s key exports while allowing the seamless inflow of goods from abroad required to elevate the condition of a developing economy and people, all the while boosting future industrial potential.
The Chinese model of free trade on a win-win cooperative basis could also help to inject new life into US industry that in many cases is in need of intense redevelopment in order to transform obsolete 20th century standards to the efficient, sustainable models of contemporary industrial trends. Imagine if instead of looking to China as a rival, Trump embraced a spirit of cooperation for major projects between the world’s two largest economies. Under such a format, US and Chinese tech firms could work jointly on projects involving the development of medicines and procedures to cure chronic diseases, joint car making initiatives which could rival European auto-giants, schemes to jointly train scientists working on cutting-edge AI and machine learning development – and these are just some of the areas where the two superpowers could combine strengths while also compensating for areas where the other might be lagging. There is a monumental level of potential inherent in joint Sino-US projects but unfortunately the current US leadership has turned its back on this potential.
Even though the US and Russia are going through a difficult period in terms of diplomatic relations, both countries still cooperate over space exploration. If China and the US could coordinate and cooperate in areas such as innovation in the hi-tech and pharmaceutical fields, the condition of both peoples could be elevated. Instead, Trump has decided to build an economic wall around the United States that has already backfired on the US stock markets which took a sharp downturn after the tariff proposal announcement and which will furthermore harm the US consumer, worker and business owner.
Trump’s path is a lose-lose proposition that will ultimately harm the US more than China. China is currently opening its doors to foreign goods and capital more than at any time in its modern history. Likewise, China continues to work on One Belt–One Road connectivity projects with partners across the globe. China will therefore reap the benefits implicit in the mentality of openness, optimism in free trade and innovation in both product development and trading logistics.
Simultaneous to this, the US is failing to re-invest in industrial modernisation but is instead using tariffs to shield businesses in need of fresh ideas and sustainable models from the realities of the modern world. The US should not be the land where time stands still, but this is the logical conclusion of the new counterproductive tariff proposals.
While Germany opens up new car making factories in China in order to safeguard its trade in an age where Donald Trump is unilaterally forcing his “rivals” and partners to introduce counter-tariff measures, the US is being shut out of some of the world’s biggest markets including China, the EU and even Washington’s NAFTA partners in Canada and Mexico.
Of course, the US has every right to reject modern trends and to build walls around its economy, but what right does the US have to make its own citizens suffer as a result? The period that the White House has set aside for debate on the matter must be a time for extremely serious reflection within the US where the correct question that should be proposed is: ‘Does our country want to retreat into the past or embrace a win-win future for the good of ourselves and our partners’?
The answer ought to be self-evident.