Foreign Affairs - 11.2019 - 12.2019

November/December 2019 99

WEIJIAN SHAN is Chair and CEO of PAG, a Hong Kong–based private equity firm, and the

author of Out of the Gobi: My Story of China and America. This article is part of a project of the

Library of Congress’ John W. Kluge Center, supported by the Carnegie Corporation of New York.

The Unwinnable Trade War

Everyone Loses in the U.S.-Chinese

Clash—but Especially Americans

Weijian Shan

I

n late June, the leaders o‘ China and the United States announced

at the G-20 meeting in Osaka, Japan, that they had reached a

détente in their trade war. U.S. President Donald Trump claimed

that the two sides had set negotiations “back on track.” He put on

hold new tari
s on Chinese goods and lifted restrictions preventing

U.S. companies from selling to Huawei, the blacklisted Chinese

telecommunications giant. Markets rallied, and media reports hailed

the move as a “cease-Äre.”

That supposed cease-Äre was a false dawn, one o‘ many that have

marked the on-again, o
-again diplomacy between Beijing and

Washington. All wasn’t quiet on the trade front; the guns never

stopped blazing. In September, after a summer o– heated rhetoric,

the Trump administration increased tari
s on another $125 billion

worth o‘ Chinese imports. China responded by issuing tari
s on an

additional $75 billion worth o‘ U.S. goods. The United States might

institute further tari
s in December, bringing the total value o‘ Chi-

nese goods subject to punitive tari
s to over hal‘ a trillion dollars,

covering almost all Chinese imports. China’s retaliation is expected

to cover 69 percent o‘ its imports from the United States. I‘ all the

threatened hikes are put in place, the average tari
 rate on U.S. imports

o‘ Chinese goods will be about 24 percent, up from about three

percent two years ago, and that on Chinese imports o‘ U.S. goods

will be at nearly 26 percent, compared with China’s average tari
 rate

o‘ 6.7 percent for all other countries.