E C O N O M I C S
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Edited by
Cristina Lindbladr Businessweek November18, 2019START ●
‘Trade Wars
Are Good, and
Easy to Win’
● The behind-the-scenes story
of how the fight with China
went from method to madnesscomplexity, the task was to throttle back China’s
imports without American consumers taking
notice or endangering President Donald Trump’s
promised economic boom.
Themodel, though,didn’taccountfor the
unpredictabilityofTrump.Behindcloseddoors,
thepresidenttookthemodestnumber—equalto
7%ofthe$505billioningoodstheU.S.imported
fromChinain2017—almostasanaffront.Hedidn’t
wantmoderateorappropriate.Hegrumbledto
aidesthefigurewastoolowanddemandedit be
roundeduptoatleast$50billion.Trumpalsoasked
hisstaff,almostasanaside:“DoyouthinkI should
puttariffs on everything from China?”
Twenty months later, what began as method
now looks more and more like madness. A tit-
for-tat tariff war has ensnared more than 70% of
bilateral trade in goods and raised the specter of
a decoupling of two economies that once seemed
destined to become progressively more inter-
twined. If the countries can’t resolve at least some
of their differences in the coming weeks, the White
House will on Dec. 15 add 15% punitive tariffs on
a further $160 billion in Chinese imports, deliver-
ing on what were once just presidential rumina-
tions. That tariff round could jeopardize America’s
record-long expansion, according to some econo-
mists. As it stands, the existing duties will knock
0.8% off global growth in 2020, according to recent
forecasts from the International Monetary Fund.
The disruptions of an all-out trade war may
yet be averted: Trump and China’s president,It started with a carefully calibrated trade weapon,
an algorithm that spat out a list of targets for an
assault on China ordered up by a U.S. president
determined to rebalance the relationship between
the world’s two biggest economies. The goal: build-
ing leverage for negotiations aimed at forcing whole-
sale changes in China’s economic architecture while
limiting the pain to businesses and consumers at
home. “We’ve given this an enormous amount of
thought,” Robert Lighthizer, the U.S. trade repre-
sentative, told senators in March 2018, highlight-
ing the work of the computer model his team had
constructed.“It’sa sensible,moderate,appropriate
amount,”hewenton,“andit is calculatedandcre-
atedina verybusinesslike, sensible way.”
The algorithm produced a 28-page list of
Chinese-made products, including aircraft tires,
pacemakers, and printed circuit boards, whose
totalvalue—$34billion—matchedanestimate
oftheannualcosttoU.S.businessesofChinese
intellectual-property theft and forced technology
transfers. The more than 800 items on the list
were selected for their potential to inflict pain on
industries Beijing has designated as strategically
important while taking into account the potential
disruption to U.S. supply chains. Adding to the