Trade war has no winner just loser and bigger loser
The United States government is slapping its own face by breaching the joint statement issued by both the US and China, which clearly stated: “to resolve their economic and trade concerns in a proactive manner”. Tariffs of 25 percent on $34 billion of Chinese imports went into effect on July 6, despite World Trade Organization regulations. China, which promised it wouldn’t make the first move to start a trade war, kept its word and had only to accept this “challenge” proposed by the US to protect the interests of our country and people.
An old Chinese saying from The Art of War by Sun Tzu goes as “killing 10,000 of enemies and sacrificing 3,000 of own soldiers”, implying the winning of this war is not worth the while. From my point of view, the losses caused by the trade war would far outweigh the gains; the Trump administration will not win in any sense. A trade war in today’s world is not even a zero-sum game but a lose-lose situation with no winners — just a loser and a bigger loser.
Earlier after US President Donald Trump signed the executive order to slap a 25 percent tariff on steel and a 10 percent on aluminum imports on March 1, a US consultation company conducted research which concluded the new tariffs could create 33,000 jobs in the US iron and steel industry, benefiting 140,000 workers, whereas the increased costs imposed on other companies and industries would cause a reduction of 179,000 jobs, affecting more than 6 million employees. So if raising the tariffs is a measure of improving the employment rate, Trump’s office is totally making it worse.
One of the standpoints Trump made to support his starting a trade war is that ever since China joined the WTO in 2001, the US trade deficit in goods with China has widened tremendously, and China is making money from Americans. This argument is actually quite ridiculous since anyone with fundamental economic knowledge knows that a trade surplus or deficit cannot be generalized as beneficial or harmful. It depends on particular cases. Indeed, China has a trade surplus with the US but this is the natural and inevitable result of value chain globalization. In the course of globalization, many US corporations also benefit from “made in China” products.
As the world’s top two economies, the trade frictions between the two countries affect the rest of the world. China enjoys surplus against the US but is in deficit in trade with Japan, Australia, South Korea and other countries. If the US spares no effort to reduce its trade deficit with China, the latter has no choice but to reduce its trade deficit with other countries, creating a domino effect in a global scale.
This is why China insisted in not making the first move. This is not only a strong argument when reporting to the WTO but also a showcase of the manner of a great power.
Actually, some of US’s traditional allies have already expressed their good intentions toward China, including Japan, India, South Korea, the United Kingdom, Germany and France. The reason is simple — they fear their country would fall victim to the contradictory policies of Trump. Ever since assuming office, Trump has irritated the whole world with his policies. Some critics have even suggested Trump is doing China a great favor by pushing away US’s friends toward the direction of China, strengthening the team power of the Belt and Road Initiative.
The current trade war is not necessarily devastating for China. Our trade surplus might suggest we don’t have as many bargaining chips as the US in negotiation but we do enjoy the preferential privilege prescribed by the WTO — developing countries are entitled to mark up tariffs. According to the National Bureau of Statistics, the China’s GDP per capita last year was 59,660 yuan ($8,923), under the standard for developed countries of $10,000.
Another notion for the trade war is that Trump wants to curb the “Made in China 2025” strategy. But the challenge will not defeat our country; on the contrary, we will be more united than ever to exert ourselves to achieve the 2025 goal. In the trend of free trade around the world, US companies will be backsliding because of the protectionism introduced by the US government.
...The losses caused by the trade war would far outweigh the gains; the Trump administration will not win in any sense. A trade war in today’s world is not even a zero-sum game but a loselose situation with no winners...