Tit-for-Tat trade dispute

Who's really winning the U.S.-China trade war, 90 days after its onset

tanveen-1
The Spectrum

Of all the promises President Donald Trump made on the campaign trail, he has followed through on his promise of higher trade protectionism in the U.S. 

The recent trade war between the U.S. and China, however, may end up harming the American economy in the long run while making China more self-sufficient than it was before. 

The tit-for-tat trade dispute started on March 22. Then, President Trump signed a memorandum to file a case with the World Trade Organization against China for discriminatory licensing practices. Trump also imposed tariffs on Chinese information technology, aerospace and machinery. 

The very next day, President Trump imposed a whopping 25 percent tariff on all steel imports (except Argentina, Australia, Brazil and South Korea) and a 10 percent tariff on all aluminum imports (except from Argentina and Australia). 

China then retaliated and imposed a series of tariffs on U.S. imports such as food, wine, seamless steel pipes and recycled aluminium. 

Thus, an all-out trade war began. Each side released multiple lists (since revised and re-revised) setting out plans for further tariffs and accusations of dumping from either side — with China filing two cases with the WTO against the U.S. for damaging trade interests. 

And the trade dispute has come to a head once again, with President Trump using his platform at the United Nations General Security Council on Sept. 26 to accuse China of meddling in the upcoming U.S. midterm elections. 

Safe to say, the complexity of the trade war and its implications will be far reaching — but no one is sure exactly how and in what ways. 

While President Trump has said, since his 2016 campaign, trade wars are “good, and easy to win,” the long-term implications of deteriorating economic relations with China should not be taken lightly. 

Although the trade war has left Chinese equity markets down 20 percent and the American Dow Jones index has been soaring, people shouldn’t expect confidence in American markets to last. This should be considered within the context of a volatile trade war with very short-term effects.

In fact, the U.S. economy will bear the brunt of its own protectionist policies, according to a report released by the European Central Bank (ECB) on Sept. 26. This means the U.S. can expect retaliation which will lead to decreasing exports. 

The lack of exports is expected to decrease U.S. economic growth by two percent, according to the ECB. At the same time, China would actually gain in exports by trading with countries, which subject American goods to tariffs. Overall, global trade would suffer by three percent. 

The ECB report comes weeks after a joint declaration from Russian President Vladimir Putin and Chinese President Xi Jinping at a conference in Vladivostok, Russia. Both countries joined in solidarity against what they deemed “unilateralism and protectionism.”

Clearly, President Trump’s aggressive protectionist policies have only pushed Russia and China closer together — with a 30 percent increase in trade in the first quarter of 2018. 

Meanwhile, President Trump has been under scrutiny for exempting specific companies from adhering to his hefty steel tariffs. Indeed, Senator Elizabeth Warren (D-MA) has asked the Commerce Department’s Inspector General to investigate relief given to the American subsidiary of a sanctioned Russian company. 

The company in question, United Company Rusal, has direct ties to Putin, according to Vox. In fact, U.S. steel companies have demanded United Company Rusal be barred from buying foreign steel.

Of course, news of this exemption comes amidst Thursday’s New York Timesarticle on over 6,000 comment letters filed with the United States trade representative. 

The sameTimesarticle revealed Senator Lindsey Graham (R-SC) — a staunch supporter of President Trump — has written letters to the president asking for tariff exemptions toward seven South Carolina companies.

Plus, over 40 Congressmen have written letters to President Trump and asked for the list of tariffed goods to be re-evaluated. 

The tariffs will soon trickle down to consumers — the working men and women who voted President Trump to power — and make American companies less competitive in the global market. 

Clearly, the supposed “protectionism” that would put “America first” is, in fact, benefiting foreign steel companies while operating under the guise of domestic goodwill. 

Tanveen Vohra is a staff writer and can be reached at features@ubspectrum.com.