Donald Trump latest trade war with China is yet another example of shoot from the hip policymaking. Even many companies in the US have lobbied for him to back down from the tariffs he is about to impose on China. Trump’s arguments for imposing the tariffs are tenuous. Even if he had a valid argument about concerns with protecting patent rights on technology it would not warrant the scale of tariffs being imposed. In any case, the US’s large deficit with China is in large part self-inflicted. A good measure of the deficit is due to US companies manufacturing in China and exporting back to the US. The US government also restricts the sale of some high-value products to China based on the argument that they don’t want to share some leading-edge technology. These tariffs are in my view not about real trade issues but purely about the President of the United States pandering to an ill-informed electorate.
The move by the US to place tariffs on upto $60 billion of Chinese products entering the United States yet again rolls back the global trends of the past thirty to forty years of an increasing free trade between markets. Donald Trump appears to have made little effort to understand the underlying issues behind the large US trade deficit, particularly with China. The US has restricted trade with China in key investment good sectors for fear that (military) sensitive technology would fall into the hands of the Chinese authorities. A further element accounting for as much as 50% of the deficit is due to US companies manufacturing in China and exporting back to the United States.
This article was attributed and provided by PG International