Trump playing a risky game of chicken

US PRESIDENT Donald Trump escalated his trade conflict with China over the past week, threatening the People’s Republic with tariffs on as much as $450 billion in products that it sells to the United States, which totalled $505.6 billion last year.

The proximate cause was China’s threat to match US tariffs on $50 billion in goods that are slated to go into effect on July 6. The ultimate cause, according to Trump’s top trade adviser, Peter Navarro, is China’s economic “aggression”, specifically Beijing’s “Made in China 2025” plan to dominate cuttingedge industries such as artificial intelligence, along with its long-standing violations of US intellectual property and forced technology transfer from US investors in China.

Notwithstanding reports of hardship for American farms and factories already, “China must know it has far more to lose in this trade dispute,” Navarro wrote in The Wall Street Journal.

We wish we could say Navarro’s strategy is likely to work. Many of the issues he identifies are real, even if he states them in the most inflammatory terms. The problem is that his boss, the president, is unable to set priorities. Instead of focusing on China, the country with which we and many other nations have the most legitimate grievances, Trump is simultaneously pursuing trade battles with every major US ally.

The US position regarding China would be stronger if Beijing faced a united front that also included Europe, Japan, Mexico and Canada. As it is, Trump is threatening them with large tariffs as well, driving them to explore closer relations with Beijing.

The fundamental basis of the presi- dent’s go-it-alone approach is ideological: America first. There is ostensibly an economic case for it as well; Navarro says Beijing has more to lose from a tariff battle because its exports to the United States far outstrip our exports to them. The same argument could be made about any country that currently enjoys a trade surplus with the US. What’s more, the US economy is currently at full employment with rising wages, and exports account for only about an eighth of US economic output, as opposed to roughly a third for the average high-income economy.

But these factors advantage the United States only as long as its overall economy remains unaffected by the distortions and rising costs associated with tariffs. A growing number of economists suggest that could start to change within a year, depending on how quickly Trump follows through on all his threats. Then the advantage might shift to the people with whom Trump has picked this fight. China, a dictatorship, can contain whatever domestic unrest might be caused by the economic hit from US tariffs, especially since it can blame the pain on Washington. US allies, too, will be able to point the finger at Trump. Meanwhile, back in the US, every conceivable industry and interest group that gets hurt by Chinese and other retaliation will be putting pressure on the administration, demanding relief.

In short, Trump owns this trade war, at home and abroad. He not only has decided to play a game of chicken with the US economy. He has decided to play against the whole world.