Introduction to the US-China Trade War

Published in El Pais, June 4th 2019.

Look at the label of many products and we will see the all too familiar “Made in China” tag. Many goods from American companies are manufactured in China including iPhones, jeans and sneakers. Ant-Globalists often see China as the enemy as they would like to see those manufacturing jobs moved to their own country and the U.S is not exception.

During Trump’s presidential campaign he longed lobbied against the trade agreement with Canada and Mexico (NAFTA) as well as the trade deficit with China. Promising to put “America First”, Trump had renegotiated NAFTA terms to be more favourable towards the United States and now has China in its sights. Here is what is at stake:

• Tariffs. To Combat this deficit Trump has imposed a tariff on $250 million dollars worth of Chinese goods coming into the US. These tariffs will theoretically make US goods more competitive to their Chinese counterpart. For their part China has countered with similar tariffs.

• Intellectual property. Often as a requirement for companies to enter the Chinese market they must handover their technological properties to local companies via a joint venture. Often resulting in the technology being stolen. China also has a poor track record with piracy as many movies, games and software are illegally distributed. China too claims that they have improved on this front.

• Stock Market. It is estimated the DOW Jones has left nearly $5 trillion on the table as a result in of the trade war with China. Leaving the entire global economy at risk of slower growth.

• Blacklisted Companies. Huawei has recently been blacklisted by the US government for doing business in the US and with American companies. China has already banned several American tech giants such as Google, Twitter and Facebook albeit more for the restriction of information than for a trade war, but there are still a few companies the government can target including Microsoft.

I myself am a globalist so I hate to see trade wars. It seems the whole world is holding their breath as they look to see which side makes the next move.