Trump’s trade war hurts everyone
What is the point of Donald Trump’s reckless trade war with China? asked The Hindu (India) in an editorial. The U.S. president slapped 10 percent import tariffs on $200 billion worth of Chinese goods last week, covering items ranging from baby cribs to internet routers to backpacks; the tax will climb to 25 percent on Jan. 1. The announcement came with a threat to impose duties on another $267 billion of Chinese products if Beijing retaliated, meaning that nearly all Chinese imports to the U.S. would face tariffs. But Beijing wasn’t deterred and fired back with duties of 5 to 10 percent on $60 billion of U.S. goods—ranging from beef to condoms—and canceled the next round of trade talks with the Trump administration. In the short term, these maneuvers will hurt economic growth and consumers in both countries. In the longer term, Trump’s “aggressive approach” could weaken multilateral institutions such as the World Trade Organization that encourage countries to use arbitration, not war, to settle trade disputes.
China won’t be bullied, said China Daily (China) in an editorial. This country has become far less reliant on foreign trade in recent years, and our own middle class is robust enough to create a domestic market for high-end goods. Domestic consumption now makes up nearly 80 percent of our annual economic growth rate, which hit 6.8 percent in the first half of 2018. “By underestimating China’s resolve to safeguard its legitimate interests,” the import-dependent U.S. will surely see its protectionist measures backfire, because ordinary Americans will ultimately pay higher prices for everyday goods. There will be plenty of collateral damage outside the U.S., said Anthony Rowley in the South China Morning Post (China). Trump’s “absurdly simplistic doctrine” of protectionism has already slowed global trade growth, which fell from 5 percent in 2017 to 3 percent in the first half of this year. New orders for capital equipment and merchandise are dipping, and soon we’ll experience a “more insidious and long-lasting impact on global manufacturing supply chains.” Those shock waves could hit hundreds of thousands of firms around the planet.
This trade war “threatens to shake the foundations of the world trading system,” said Martin Khor in The Star (Malaysia). The U.S. is blatantly violating World Trade Organization rules with its freewheeling approach to import duties. China ought to have a clear case, but the Trump administration has deliberately created a crisis in the WTO’s dispute settlement system. In August, the U.S. announced it would not allow the appointment of new judges to the WTO’s Appellate Body to replace those retiring. Soon there will be only three judges left on the seven-member panel, and two more are set to retire in January. At that point, there will be no legal recourse against countries that break the rules, and the WTO will be quite toothless. The trade war will spread, and the world will be governed by “the law of the jungle.”