Make America Great Again?


Make America Great Again? The world again experienced a conflict between two sides with conflicting ideas but what made it unique was a “war” in the international trade market. The tools of fighting were tariffs and the soldiers being the governments of the United States of America and The People’s Republic of China. 2018 witnessed President Donald Trump chasing his dream of “America First” which also remained at the center of American foreign policy till the end of his tenure.

Rising above words, came with heavy tariffs on Chinese imports in the US market when Mr. President “hereby ordered” the US companies to stop doing business with China accusing it of killing around one million Americans with imported fentanyl and stealing hundreds of billions of dollars from intellectual property. One of the many reasons for this rivalry was the trade deficit of $419.2 bn which hollowed US manufacturing, according to trump where China makes up the largest part of the US trade deficit threatening jobs and national security.

China’s reputation for being intellectual property thief was evident when one of five US corporations had intellectual property stolen within them by China summing up to $600 billion/year according to the IP commission. When the situations were such, what could have possibly resisted Trump to slam heavy tariffs on China which hindered “The Great American Dream”? 

The Gameplan

President Donald Trump started a trade war with the world involving multiple battles with China and American allies. Fearing any retaliation from the world trade organization, the trade war was carefully aligned with the US legal rationale by calling foreign imports a threat to national security with Trump imposing tariffs/quotas on foreign imports.

The onset of this estimated $50 billion tariff can be traced back to March 22, 2018, when Trump signed a memorandum under section 301 of the Trade act of 1974 which aimed at making America a stronger and richer nation according to Trump. Prior to this significant step, were tariffs on solar panels and washing machines of 30 to 50 percent in January 2018 followed by a 25% tariff on Steel and a 10% tariff on aluminum from most countries.

Chinese economic growth slowed to levels unseen since 1992 but the American farmers were the first to feel the result as China canceled the orders and manufacturers were increasingly gloomy. Stage one of tariffs began in July 2018 on $ 34 billion worth of Chinese imports and stage two, the remaining $16 billion were executed in August 2018.

These tariffs amounted to a $12.5 billion increase which was borne by American households and American firms. From a political standpoint, the trade conflict between the United States and China may result in winners and losers. However, the most recent information shows that financially, the two sides are washouts. Additionally, they may be able to provide an explanation for the increased interest in a deal: For both China and the United States, losses are mounting into the tens of billions of dollars. 

Trump can boast politically that China has lost significantly more money than the United States. According to newly released trade statistics, U.S. imports from China have decreased significantly by $53 billion in the first nine months of this year. Just $14.5 billion have been lost in U.S. exports to China.

The Endgame

The retaliation was evident and so it came. China initiated a WTO complaint against the US steel and aluminum tariffs on April 2018 while the EU opened a similar case on June 2018. In December, the WTO ruled against the USA in steel and aluminum cases brought by China, Norway, Switzerland, and Turkey saying there was no national security emergency.

China also felt the economic impact as a result of the trade war though not enough to be pressurized by Washington’s core demands. The Chinese government placed retaliatory tariffs on US goods wherein average tariffs on American exports had increased to 20.7% compared to 8% in January 2018 while it decreased to 6.7% with other countries.  

Retaliatory tariffs on 8,400 products worth $133.9 billion, or 8.7% of total exports in 2017, increased from 8.7% to 28% on U.S. exports. The decline in U.S. exports and imports is not surprising given the significant increases in tariffs. An economic-growth model is used in a recent study to estimate the long-term effects of the trade war if the Biden administration continued to implement Trump’s trade policies.

GDP in the United States would fall by almost $60 billion under this scenario, and employment, as measured by full-time equivalent jobs, would fall by 176,800. Additional tariffs imposed by our trading partners would result in an additional $10 billion in GDP reduction and the loss of another 30,000 full-time equivalent jobs. Numerous individual consumers and businesses were adversely affected by the Trump administration’s trade policies. Overall, these policies led to lower incomes and fewer jobs for all Americans. 

The truth will surface eventually assuming that the advancements in the settlement on authorization will succeed where others have fizzled, and much will rely upon China’s eagerness to make an interpretation of arrangements into regulation and, significantly, uphold them.

The effects are negative and significant, but both economies can manage them because they are smaller in absolute terms and in relation to GDP for the US than for China. However, even if the tariff war is resolved, the two economies’ economic and technological rivalry is likely to continue.

The Chinese economy will keep on developing at a quicker genuine rate than the US economy and will probably outperform the US economy as far as total genuine Gross domestic product in the mid-2030s. The US-China trade war surely shifted world producer and consumer attitudes and how nations perceive their trading partners. How well the great American dream advances for the world to see amid China’s new geopolitical and economic interests day by day. 

The Future 

Over 80% of U.S. businesses were affected, and about 50% said they lost sales as a result of losing market share to foreign competitors, disruption and uncertainty in the supply chain, and changes in diplomatic ties, according to the U.S.-China Business Council 2019 report. A pandemic of the coronavirus would exacerbate the situation even more.

The huge consumer base in China and rising production costs are the two main causes of the likely consequences. This would further divide the investment strategy, making it possible to exit China’s export-oriented business. As was mentioned earlier with regard to the manufacturing base that American businesses have in China, it is becoming increasingly unsustainable for them to continue losing out.

About 200 companies with headquarters in the United States want to shift their manufacturing base from China to India, according to the U.S.-India Strategic and Partnership Forum (USISPF). For example, a goliath, Apple’s iPhone producer Wistron and Foxconn will presently move 20% of creation from China to India.

The trade war, unilateral U.S. actions and its unwillingness to remain a “global policeman,” and China’s determination to retaliate tit-for-tat may risk spilling over into diplomatic and political territory. We have already seen that in the form of strained diplomatic ties regarding the issue of the expulsion of journalists from the United States from China, Chinese assertion in its periphery (upping the ante in the South China Sea, border issues at the Line of Actual Control with India), and China’s unruly attitude toward her economic partners regarding the issue of the investigation into the coronavirus’s origin.

The discussion of new Cold War dynamics is gaining momentum in the expert community. The most recent piece of rhetoric from President Trump is about cutting off all ties with China. He has accused WHO of possible collusion with China and has already frozen the organization’s funding.

Scholars are not hesitant to link all of these unilateral steps taken during the pandemic to distraction strategies used to cover up his failure to manage the coronavirus in the United States. A lot now depends on the upcoming presidential elections, in which Joe Biden, the Democrat candidate and former vice president, is prepared to compete with the incumbent.

The willingness of Biden to continue economic escalation against China has prompted concerns regarding the trade relationship’s future. U.S. export controls and tariffs on Chinese goods, as well as Chinese retaliatory tariffs on U.S. exports, have not been eased. U.S. policymakers could look for domestic means of countering China to escalate the trade dispute: Legislators in the United States have threatened to completely remove Chinese companies from U.S. exchanges and have introduced bills that would require government investment plans to divest from Chinese companies.

The COVID-19 pandemic has revealed the fragility of global supply chains, and China’s rise has also contributed to the revival of industrial policy in the United States. In August 2022, the CHIPS and Science Act and the Inflation Reduction Act, both of which were passed, will provide hundreds of billions of dollars for the domestic production of high-tech goods like semiconductors and scientific research. Biden’s October 2022 export controls, according to experts, could stifle China’s semiconductor industry because of the simultaneous efforts to harm competing Chinese industries.

Whether recent trade restrictions are a strategy of complete economic decoupling, a sign of a decline in trade, is up for debate among analysts. Others argue that the most recent measures are restrictive enough to strike a balance between safeguarding national security and maintaining thriving economic ties by pointing to the ongoing rise in overall trade value between the two nations. 

In the meantime, some experts have questioned whether China’s economic model is fundamentally incompatible with global trading rules and whether the WTO system is sufficient to address American complaints. For instance, the idea of a subsidy requires that there be a clear line between the state and private industry, which is becoming increasingly muddled in China.

The Office of the United States Trade Representative (USTR) stated in a recent report that it is now “widely accepted in the United States that WTO rules do not, and cannot, effectively discipline many of China’s most harmful policies and practices.” According to the report, the USTR is looking into ways to change U.S. trade laws to stop these practices.

Hillman of the CFR argues that while China’s entry into the WTO was not a mistake, the United States erred by failing to use its tools sooner to stop China’s unfair trade practices. Hillman asserts that Washington might need to look elsewhere, despite the fact that the WTO continues to be a valuable forum for the United States.

A few specialists have proposed a minimization among similar nations that would work in line up with the WTO. More extreme options have been promoted by politicians; For instance, Senator Josh Hawley (R-MO) has proposed eliminating the WTO entirely.

Henry Gao, a teacher at Singapore The executive’s College and a specialist on Chinese regulation and worldwide exchange say that the utilization of one-sided taxes harms the US’s picture as a boss of the deregulation and surrenders moral power to China. Both Hillman and Gao concur that it was a mistake on the part of American leaders to believe that joining the WTO would fundamentally alter China. 

I would ask from a distance: Was the World Trade Organization ever meant to change countries’ economic systems? That does not satisfy me. The United States should be patient and work within the WTO to negotiate new rules as needed because China’s model cannot be sustained. Even if you win, what’s the point of trying to compete with China by becoming China?

#maga #MakeAmericaGreatAgain

Abhilaksh Dhankhar is a Orator, Writer, Analyzer of geopolitical scenarios and military strategies. He has attended numerous conferences around the world on politics and has been conferred with more than 5 international awards. Abhilaksh also served as esteemed jury member in diplomatic meets. His vision to expand the ideals of international diplomacy made his self-initiated project "Drona" to be recognized as top ten most sustainable projects in India. 11 times, he has been selected for Harvard's Asia conferences and international relations programs. He worked with UNESCO under project RAISE to remove the gender disparity in the society. Abhilaksh constantly likes to spread his ideas and delivers effective seminars and sessions around the world, so far teaching more than 200 youngsters.


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