Weijian Shan
100 μ¢¤³£ ¬μμ¬
The parties to this trade war may yet step back from the abyss.
There have been over a dozen rounds o high-level negotiations
without any real prospect o a settlement. Trump thinks that taris
will convince China to cave in and change its allegedly unfair trade
practices. China may be willing to budge on some issues, such as buy-
ing more U.S. goods, opening its market further to U.S. companies,
and improving intellectual property protection, in exchange for the
removal o all new taris, but not to the extent demanded by the
Trump administration. Meanwhile, China hopes that its retaliatory
actions will cause enough economic pain in the United States to make
Washington reconsider its stance.
The numbers suggest that Washington is not winning this trade
war. Although China’s economic growth has slowed, the taris have
hit U.S. consumers harder than their Chinese counterparts. With
fears o a recession around the corner, Trump must reckon with the
fact that his current approach is imperiling the U.S. economy, posing
a threat to the international trading system, and failing to reduce the
trade deÄcit that he loathes.
Trump may back away from his self-destructive policy toward
China, but U.S.-Chinese competition will continue beyond his tenure
as president. Much o the coverage o the conÁict makes it seem like
a clash o personalities, the capriciousness o Trump against the im-
placable will o Chinese President Xi Jinping and the Chinese Com-
munist Party. But this friction is systemic. The current costs o the
trade war reÁect the structural realities that underpin the relationship
between the U.S. and Chinese economies. It’s worth tracing that
dynamic as the two great powers try to Änd a new, Ätful equilibrium
in the years ahead.CONSIDER THE LOBSTERS
The trade war has not produced the desired results for the United
States. Washington Ärst raised taris on Chinese imports in 2018. In
the same year, Chinese exports to the United States increased by $34
billion, or seven percent, year-over-year, while U.S. exports to China
decreased by $10 billion, or eight percent. In the Ärst eight months o
this year, China’s exports to the United States dropped by just under
four percent compared with the same period in the previous year,
but U.S. exports to China shrank much more, by nearly 24 percent.
Instead o narrowing the trade gap, the taris have coincided with a