Trump’s Tariffs Will End the “Trade War”

 
Key points in this article:

  • President Trump is trying to end the ‘trade war’ with China
  • The old U.S. Engagement policy failed as China grew economically but did not embrace democracy
  • China has pirated U.S. intellectual property for use in military and other aggressive technology

 
U.S. President Donald Trump has introduced a tariff of 25% on steel and 10% on aluminum, which will take effect on the 23rd of March.

It was a wise response to the unilateral nature of trade practices between the U.S. and China, which is fast becoming a major national security issue. Trump has acknowledged China’s theft of U.S. intellectual property and has ordered an increase in customs taxes on Chinese products based on Section 301 of the Trade Act of 1974.

Some critics fear the start of a trade war, but we first we need to examine whether there is any basis for these concerns.

 

Trump Will End the Trade War

To jump straight to the conclusion, Trump is far from trying to initiate a trade war. He is trying to end it.

Peter Navarro, Trump’s Director of Trade and Industrial Policy, wrote a report titled “Scoring the Trump Economic Plan” in September 2016, in which he defended Trump’s policy. “Those who suggest that Trump’s trade policies will ignite a trade war ignore the fact that we are already engaged in a trade war,” he said. He criticzed the old system saying, “America has already lost tens of thousands of factories, millions of jobs, and trillions in wages and tax revenues. Donald Trump will simply put our government on the field in defense of American interests.”

He holds that China is the world’s greatest trade cheat, and has been criticizing China’s unfair trade practices: undervaluing their currency, pirating intellectual property, compulsory sharing of technology by U.S. companies entering China and labour practices bordering on forced labour. The list goes on.

 

U.S. Failures in Customs Policies Against China

During his presidency Bill Clinton ignored these unjust practices and allowed China to join the WTO through the Engagement policy. He hoped to influence China to embrace democracy as a member of the international community by inviting them into the U.S.-centric world order.

He was wrong. China’s mercantilist policy wiped out over 2.4 million jobs in the U.S. between 1999 and 2011. In addition, imports from China triggered a drop in wages for workers in smaller U.S. companies.

People working in the U.S. manufacturing industry dropped to a mere 9%. While some argue that this was the result of mechanization, this is not the case given that other countries, such as Japan and Germany, have maintained percentages above 20% even after mechanization.

Since 70% of research and development happens in the private manufacturing scene, the loss of the industry will mean the loss of new technological developments.

 

What China Does With Pirated Technology

The most serious problem of all is China’s enforced appropriation of U.S. technology. There was an infamous incident in 2011 when China stole technology from Aerospace giants Airbus and Boeing, but the Obama administration refused to deal with the problem.

There is also a big problem with what China is doing with the stolen technology. Xi Jinping, Chairman of China, came up with the “Made In China 2025″ strategy to reinforce the competitive power of China-made products, and has built Communist Party branches inside private and multinational companies within China. Thus they are effectively Party-owned.

In October 2016, the Communist Party of China began campaigning under the banner “Harmony between The Army And People” on the People’s Liberation Army website.

According to the post, they “aim to create a nationwide network platform of harmony between the army and the people by unifying organizations related to the military, the government, companies, universities and business organizations, and advancing the transfer of technology, training entrepreneurs, and developing scientific technology.”

The U.S. has transferred USD3.5 trillion worth of technology to China, but there is a high likelihood that this was used in China’s military.

With this in mind, Sen. Marco Rubio has long been warning of the Chinese government’s infringement of human rights and military ambitions. On 13 March, he contributed an article to the New York Times entitled “To Fight China on Trade, We Need More Than Tariffs”. He positively supports Section 301 of the Trade Act of 1974 and suggests, “We should limit “joint ventures” with Chinese copycat companies and encourage our allies to do the same.”

 

China Will Be In Trouble If They Lose The American Market

Trump’s new plan not only aims to raise the customs tax on China made IT-related products, but also includes a wider range of products such as home electronics, clothing and food. Fears have been raised that this may cause market inflation in the U.S.

In response to this, Reagan’s former economic brain and Trump’s economic advisor Stephen Moore said, “If we lose access to [China's] cheap goods and services, we pay more for clothes and toys and toothpaste at Walmart” in his Washington Times article (11 March, 2018). “If they lose access to our markets they crash into recession. Who loses more here?”

China cannot do without their biggest customer, the U.S. This is why Trump says the U.S. has a far greater advantage in a trade war.

The mass media seems to portray the conservation of the existing free trade scheme as an act of justice, and that Trump is a megalomaniac who is destroying the world order.

This is not true.

China has now grown into an oppressive totalitarian superpower because the American customs tax failed to achieve its intended goal. The real question is “Can we allow an atheistic totalitarian China to wreak military havoc on our planet?”

The National Security Strategy announced by the Trump administration last year revealed that the U.S. does not think of economic power and military power as two separate things. Trump’s aide and Commerce Secretary Wilbur Ross and Peter Navarro can see into the true nature of the issue. They are not fooled by the myopic view of many economists.

If Trump’s tariffs deal fatal blows to the Chinese economy it may cause China’s bubble to burst. The bubble burst may domino into a turnover of the government system.

There is a possibility that China will appeal to the WTO to stop this from happening, but they must realize that this is the perfect opportunity to correct their unfair trade practices and have a think about what global justice really is.

Hanako Cho

Trump’s Tariffs Will End the “Trade War”
Copyright © IRH Press Co.Ltd. All Right Reserved.