Have US/China Relations Affected Americans' Wallets?
Americans should care about U.S./China relations because it often hits them right in the wallet.
That’s what Mary E. Lovely says about the U.S./China trade war. She said in a CNN commentary that President Trump’s trade war is increasing Americans’ cost of living. Lovely, an economics professor at Syracuse University, said the trade war is a double-edged sword. Not only does it hurt “hundreds of American companies that produce and sell within China,” but “it risks pushing Chinese consumers away from U.S. products, taking away American jobs in the process.”
American families are “paying the price of Trump’s trade war,” and so is China.
A trade war starts when a nation attempts to protect its domestic industry and create jobs by imposing tariffs on imports resulting in retaliation from the foreign country and risking a reduction in international trade.
Billionaire American investor, Ray Daliotold a Kentucky citizen at a recent China Town Hall meeting sponsored by National Committee on U.S.-China Relations, that he should care about U.S./China relations because it affects Americans’ personal lives.
Dalio explained, “…the technologies you use, the cost of goods that you have to buy, jobs and so on are affected a lot by Chinese/American relations.”
But, the Good Lord is in the Detail, to use an idiom that generally refers to the idea that whatever one does should be done thoroughly. In other words, we must understand the bigger picture.
So what is the bigger picture?
Trump didn’t impose tariffs on China in order to start a trade war; he did it to send a message to China that America would no longer be a patsy to its unfair practices. Any American who has ever had to fight for what he believes is right can understand the concept of not backing down.
Delving deeper to June 2018 when Trump issued a statement regarding trade with China, the President was concerned about China’s unfair practices, resulting in a long-standing trade imbalance between the two countries.
He pointed to a March 2018 report published by the United States Trade Representative (USTR) that details China’s discriminatory and burdensome acts against the U.S.--notably, its theft of intellectual property and technology.
According to the report, the USTR undertook a Section 301 investigation into unfair acts, policies, and practices of U.S. trading partners at the request of President Trump. Section 301 of the Trade Act of 1974 permits the USTR to investigate potentially actionable conduct under the current U.S./China trade agreement.
Over the years, relations have become increasingly imbalanced. China developed a strategy to dominate emerging high-technology industries to boost its own future economic growth despite hurting the economic growth of the U.S. as well as other countries.
Among the president’s concerns was American jobs diverted to China, U.S. citizens receiving unfair remuneration for their innovations, and China’s undermining of American manufacturing and services. The Chinese government used several mechanisms to regulate U.S. companies’ operations in China, pressuring the transfer of intellectual property and technology to Chinese companies.
The report concluded that China was indeed engaging in unfair practices, but further investigation was necessary. It suggested the need for more intensive bilateral engagement. Trump responded by imposing $50 billion in tariffs on Chinese goods to encourage the rising superpower to change its ways.
China responded in kind, signaling its intentions to maintain an unfair advantage. So Trump imposed 10% tariffs on more Chinese goods to encourage China to engage in a more balanced trade relationship with the United States.
Trump said in a June 18, 2018 statement, “We will continue using all available tools to create a better and fairer trading system for all Americans.”
Trade talks began in December 2018. Trump maintained the 10% tariffs. By February 2019, progress was being made but Trump imposed a hard deadline for improvement or else tariffs would increase to 25%. Two more meetings occurred in April 2019. By May 2019, members of congress were showing support for Trump’s hard stance, including leading Democrat, Senator Chuck Schumer who told Trump to “not back down.”
The light at the end of the tunnel gleamed on January 15, 2020 with the signing of the Phase One Deal between the U.S. and China--bringing huge benefits to American agriculture.
Unfortunately, by May 2020, amidst a pandemic that originated in Wuhan, China, and reportedly was created there, a Chinese-run newspaper said that China officials were thinking about scrapping the deal and starting over.
China had already failed to fulfill its purchase targets and mishandled the COVID-19 outbreak by delaying its announcement.
President Trump maintained his hard stance, reiterating China’s long history of taking advantage of the United States.
Knowing the bigger picture of China’s abuses against the United States, Americans can understand that a president who truly cares about the people should not back down.
Arleen is a lawyer, writer, editor and educator.
By Arleen Richards