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There are five things everyone should know about our trade war with China:
1. President Trump and his advisors will not back down. China’s expectation that the White House would give ground on issues already decided was profoundly mistaken.
Hope - Trump - Desire - Stock - Market
Their hope that Trump would prioritize his political desire for a buoyant stock market and booming economy over re-engineering our trade relationship with China was an error.
2. China’s senior official in the talks, Vice Premier Liu He, suggested that the changes his team demanded in terms already agreed to were “very natural.”
Issues - Stake - Matters - Principle - Beijing
He further said that the issues at stake were “matters of principle” that were unacceptable to Beijing. So, not outlawing intellectual property theft, apparently, is a “matter of principle” for the Chinese.
3. China wants the U.S. to trust they will abide by any agreement struck between the two sides. That the arrangement should be codified through legislation was apparently viewed as awkward politically for Chinese President Xi Jinping.
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Here’s the problem: We do not and should not trust Beijing. We should not, in particular, trust President Xi, who openly lied to President Obama about, for instance, his country’s activities and intentions in the South China Sea.
4. The Chinese have retaliated in kind to the increase from 10 percent to 25 percent in tariffs placed on their exports coming into the U.S. They boosted duties on $60 billion of U.S. exports from 5 percent and 10 percent to 20 percent and 25 percent, respectively.
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However, the impact on the U.S. will be far less than the hit to China, especially if President Trump follows through on the threat of hikes on an additional $300 billion of Chinese exports. Exports account for roughly 20 percent of China’s economy compared to only 12 percent of U.S. GDP.
That comparison, though, understates the disparate impact. In 2018, the...
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