China Fires its First Volley in Trump's Trade War
In retaliation for tariffs imposed by the Trump Administration on more than 100 Chinese products, China has imposed its own import duties of 15% to 25% on 128 products it imports from the U.S. The tariffs are substantial enough that Chinese importers will seek to source the products from other countries.
In addition to the import duties, China’s Commerce Ministry threatened to take legal action against the US through the WTO, and urged Washington to “pull back from the brink, make prudent decisions, and avoid dragging bilateral trade relations to a dangerous place.”
While it is true that China engages in a number of unfair business practices, steals technology from other countries and uses its exports as an economic weapon, China's actions are not much different than U.S. tactics. Both countries subsidize many of their industries and the U.S. also engages in wholesale economic espionage.
The reason that the U.S. has such a large trade imbalance with China is not so much that China engages in unfair practices but because Chinese manufacturers are vastly more competitive and China is much better managed as a country.
China has invested heavily in its industry, infrastructure and securing raw materials, while America has diverted its financial resources to enriching its oligarchy and their criminal corporations at the expense of the rest of the country.
When the U.S. lost agricultural jobs to machinery and chemicals it ramped up manufacturing, when it lost its manufacturing jobs to inefficiency and foreign competition it switched to a war, consumerism and debt economy—the final stage of a failing capitalist economy.
By spending a trillion dollars a year it can't afford on enriching its war industry, the U.S. federal government has piled up more than $21 trillion in debt and this year will likely spend over $600 billion just on debt interest.
Blaming other countries for decades of bad government won't remedy America's fundamental problems. Imposing import duties on countries who are more competitive will drive up U.S. inflation while weakening export markets that retaliate with their own tariffs and apply downward pressure on wages.
The logical end result will be that the average American will become poorer and have a bleaker future.
The solution to what ails America's economy is not imposing trade barriers but to address the root cause and drastically cut military spending, stop creating enemies and invest in new technology, education and infrastructure.