Who is Winning the US-China Trade War?

By Pranesh Kumar, Staff Writer

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“China is a sleeping giant,” Napoleon Bonaparte once warned over 200 years ago. “Let her sleep, for when she wakes she will move the world.” 

Over the last few years, after decades of being the leading economic power, the US has been facing increasing competition from China on maintaining its economic and political dominance. The economy of China was once stagnant, but has grown tremendously since the adoption of market-based economic policies and more lenient global trade policies. From 1979 to 2018, GDP (Gross Domestic Product) growth in China has averaged 9.5% according to the World Bank, causing China to have the second largest economy and lift over 800 million of its citizens out of poverty. This success has been embodied by the infamous “Made in China” products becoming more and more common in the US. Although economic growth is now slowing down, the Chinese government has ambitious goals of improving Chinese innovation and surpassing the US economy as the largest economy in the world by the year 2025. 

What the numbers ultimately point to is that the Chinese economy has grown tremendously in recent years. This has been beneficial for the global economy, but the US is recently starting to feel threatened because it does not feel that it is “profiting” enough from the trade relationship with China. Currently, the US trade deficit is $621 billion dollars, meaning that the US exports $621 billion dollars less in goods than it imports. $442 billion dollars of this deficit is with China. For this reason, alongside accusations of intellectual property theft, unfair deals, and US jobs moving to China, President Trump has made it clear that he wants change in the US-China trade relationship. Although his motives are justified, Trump’s policies of punitive tariffs have instigated a trade war with China that neither country has benefited from. 

Trump once claimed that “trade wars are good and easy to win.” However, like much of the rhetoric we are accustomed to hearing from the president, this statement is exaggerated and instead points to Trump’s idea that trade wars can be useful for the United States. His belief is that the US has suffered from bad trade deals and that many manufacturing jobs have moved away from the US to China. In retaliation of this economic shift, Trump has declared tariffs of up to 25 percent on some $200 billion dollars of Chinese goods. The tariffs (taxes on imported goods), although meant to deter China from importing goods to the US, have been damaging mainly to US businesses and US consumers, who have had to pay higher prices for basic goods. The US economy is still at record highs in corporate profit margins, but the trade deficit has still not fallen below $400 billion after more than a year of tariffs. As a result, Trump has recently attempted to levy more tariffs, causing the stock market to plummet and fears of an imminent recession. It is certain that the US is not winning the trade war by any account.

Despite the trade war backfiring on the US, China has also suffered tremendously. China’s exports to the US have fallen and the value of the Chinese Yen has reached record lows. Furthermore, China has suffered, being unable to acquire high-end US technologies. As a result, it can be claimed that both China and the US have lost the trade war they were both responsible for starting. From this trade war, which doesn’t seem to be ending anytime soon, what can ultimately be learned is that warfare in any shape or form is usually harmful in our current day. Perhaps the better solution to the US – China’s trade war would have been investing more in AI and other technologies to catch up with China rather than try to knock them down.

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