by Frank Li
Two weeks ago, I warned the U.S. against starting a trade war with China (The U.S. vs. China: A Trade War?). Since then, the situation has worsened, with both sides throwing more punches at each other (China retaliates against Trump tariffs with levy on US food imports and Trump Doubles Down on Potential Trade War with China). I must therefore escalate my warning accordingly ... Please share this article - Go to very top of page, right hand side, for social media buttons.
1. A trade war is war!
Below is a famous quote from China.
What, then, is the deception in this case?
Blaming China for our own problems! For more, read: The U.S. vs. China: A Trade War?
2. What is President Trump thinking?
Below is President Trump's tweet on the trade war.
I am embarrassed, totally, to say the least!
3. Can the U.S. win the trade war against China?
No!
Why not?
War is typically a game of attrition (Against Attrition Warfare). This trade war will be no exception. The plain truth is that China can afford to lose a lot more than America can, thus winning the war ultimately. Two main reasons:
China's leadership is long-termed and stable, while ours is short-termed and unstable, subject to a 2-year election cycle.
China is a county with a functional government, thus allowing China to withstand a lot of challenges. In contrast, our government is dysfunctional, as it is owned by special interest groups.
In short, America will blink first, guaranteed!
4. Lessons from the past
Too many! Let’s just look at two:
China today vs. Japan in the 1980s.
4.1 Smoot-Hawley Tariff Act
Below is an excerpt from Wikipedia – Smoot-Hawley Tariff Act.
The Tariff Act of 1930 (codified at 19 U.S.C. ch. 4), commonly known as the Smoot–Hawley Tariff or Hawley–Smoot Tariff,[1] was an act implementing protectionist trade policies sponsored by Senator Reed Smoot and Representative Willis C. Hawley and was signed into law on June 17, 1930. The act raised U.S. tariffs on over 20,000 imported goods.[2]
The tariffs (this does not include duty-free imports – see Tariff levels below) under the act were the second-highest in the U.S. in 100 years, exceeded by a small margin by the Tariff of 1828.[3] The Act and following retaliatory tariffs by America's trading partners were major factors of the reduction of American exports and imports by more than half during the Depression.[4] Although economists disagree by how much, the consensus view among economists and economic historians is that "The passage of the Smoot–Hawley Tariff exacerbated the Great Depression."[5]
4.2 China today vs. Japan in the 1980s
Below is an excerpt from this excellent article: In Trade Fight, China Today Differs From 1980s Japan.
The main tool the U.S. used to get Japan to change course, section 301 of the U.S. Trade Act of 1974, is the one the Trump administration is using to confront China. It gives the president broad powers to retaliate through tariffs and other means in trade disputes. “The last time it was used [with Japan], it worked,” says Clyde Prestowitz, a prominent Republican trade warrior from that era.
But even Mr. Prestowitz doubts such tactics will work again.
“China is a different animal,” he says.
For more on China vs. Japan, read: America: What if China is Japan Times 10?
5. How can we avoid a repeat of the Smoot-Hawley Tariff Act disaster?
End the war before it starts!
6. Will we end it now?
No!
Why not?
Politics!
Specifically, President Trump must score political points before declaring victory, which takes time. Meanwhile, both China and America will suffer ...
7. The art of the deal?
Below is a more recent tweet (dated April 8, 2018) from the author of The Art of The Deal.
Again, I am embarrassed, totally, to say the least!
President Trump obviously does not know whom he is dealing with!
Mr. President, be real - Experience-wise, if not intellectually, you are not in the same league as President Xi (President Trump vs. President Xi), nor President Putin (President Trump vs. President Putin)!
8. Discussion
America loves wars, thanks to America: A Culture of War, but is not good at winning any of them. Two big examples:
Real wars: the Vietnam War, the Iraq War, and the War in Afghanistan.
Social wars: the War on Poverty and the War on Drugs.
For why and how, please read my last book: American Democracy - Why is it failing & how to fix it?
9. Closing
President Trump, fix the root cause, instead of launching a trade war against China, as I have suggested (The U.S. vs. China: A Trade War?)!
Now, please sit back and enjoy the video below.
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