These days it looks at if all of the world's major powers are locked in some kind of "p***ing" match aimed at seeing who can reach the farthest. And nowhere is such a match sillier than the looming trade war between the United States versus China. The latest salvo was recently fired by China's President Xi Jinping in an indirectly terse message to his US counterpart, Donald Trump, bluntly stating: "Arrogance will get you nowhere." Xi added that co-operation and dialogue were the only methods to resolve disputes between countries in today's volatile world.
Mature words from a mature president. Xi's remarks at a major international conference on trade and commerce were also a response to the dangerous political tensions between Russia, Iran, the US and its allies.
"The Cold War and zero-sum mentality looks out of place in today's world," said the Chinese president. "Arrogance or only focusing one's own interests will get nowhere. Only peaceful development and cooperation can truly bring win-win or all-win results," President Xi told the gathering.
Underscoring Xi's dire warning against US unilateralism and great power chauvinism, the Chinese leader has an unlikely ally. Trump's high-handed and brash manner towards China now has large chunks of his voter base alarmed and anxious owing to the potential damage to their livelihoods that his aggressive and bellicose policy is stoking.
Here's the rub: If President Trump's actions trigger a full-scale trade war with China, among the hardest-hit sectors of the American economy will be the farming states in the mid-west. Remember, it was in states like Idaho, Indiana and Iowa where voters decisively backed his run for president in 2016. So his actions are fraught with political danger and unintended consequences: If this constituency sees their livelihoods burned in a brutal trade war, Trump's Republican Party can expect fierce retribution in the upcoming mid-term elections in November. The possible outcome could see Republicans lose majorities in the House of Representatives and Senate, thereby hobbling Trump's presidency and reversing his agenda.
The US president started the trade-war when he announced that his administration was going to double-down on imposing tariffs on Chinese exports. Trump said the levies on Chinese goods would be increased from an already whopping $50 billion to an eye-popping $150 billion. Indeed, politicians from both the Democratic and Republican parties have long accused China of unfair trading practices, especially during national campaigns.
But the picture is not a one-dimensional one. China's massive $375 trade surplus with the United States is due in part to an historical structural economic reality -- American corporations, like Apple, have maximized profits for their shareholders by setting up factories in China. The end result is that this has helped to gut the US manufacturing sector and killed off many jobs. That's the negative impact for the US. For China its manufacturing and export sector grew exponentially. Blaming China for the structural problems of US capitalism is just plain silly.
So bullying and trying to intimidate China to slash trade tariffs is a ham-handed way of dealing with the realities of America's homegrown problems. It's like trying to use old, outmoded 20th century intimidation tactics in a new 21st century global construct. The challenge facing President Trump is that the world has changed significantly from the days when the US hegemon could simply force its will on any nation on the planet. China's economic and military power ensures that it will not be browbeaten into submission or pander to failings that are do with America's inherent problems.
Here's China's official response: "With the development of China's economic growth and strength of science and technology" Beijing will never listen to the command of Washington." That said Beijing is calling for trade problems with the US to be resolved through negotiations at the World Trade Organization.
Herein lies the dilemma with Washington's bombastic mentality. The United States, used to getting its way like a spoiled, petulant child, does not like to resolve disputes through mutual dialogue and multilateral-based rules. It favors aggressive unilateralism where one side wins based on a zero-sum calculation. But in this context the United States must be very aware, and sane people around the president should tell him, that trade wars can spark an escalation into military conflict that nobody wants in today's super-armed environment.
Finally, President Trump's bragging that it is "easy to win a trade war " shows a breadth-taking lack of foreign policy experience and a simplistic approach to international relations and commerce. He seems to think that China's vast export business with the US leaves it vulnerable to Washington's threats of tariffs. But bellicose statements aside the reality is that the American economy is dependent on China.
For the Unites States the stakes of a full-blown trade war with China are enormous. Specific sectors that stands to lose if China goes ahead with its own tariffs are the soybean, corn, beef and pork farmers in US mid-western states. For example, soybean exports from the US to China alone account for a whopping US$14 billion annually to the American economy -- roughly the same as Boeing's aviation business with China, which is also at risk of termination from Beijing's proposed counter-tariffs.
In a report by the New York Times, US farming communities whose livelihoods depend on exports to China are shouting for the White House to call off the trade war. The list of worried farm states includes: Arkansas, Dakota (North and South), Idaho, Indiana, Illinois, Missouri, and Montana. It was largely these rural states that helped get Trump elected in 2016.
Here's how the NTY reported on the issue: "China's aggressive response to Mr. Trump's tariffs is aimed squarely at products produced in the American heartland, a region that helped send him to the White House. A trade war with China could be particularly devastating to rural economies, especially for pig farmers and soybean and corn growers. Nearly two-thirds of United States' soybean exports go to China." While the US President Tweets and hurls insults, China does a precision, targeted tariff response that is both economic and political.
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