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Trump vs. China Round Two – Escalation?

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As the 2024 U.S. Presidential Election draws near, the world watches with bated breath, particularly with regards to the potential return of Donald Trump to the Oval Office. Known for his bold, often confrontational tactics, Trump’s re-election could signal a significant an escalation of competitive and retaliatory moves particularly in the realm of trade and economic policy. Trump’s move in this direction are a near certainty, the only question is how the China and the rest of the world will respond.

Trump’s rumored policy to impose an unprecedented 60% tariff on all Chinese imports would be a radical escalation from his first term’s trade wars. But this rumor originates with the Washinton Post, perhaps the least reliable source for information about Trump’s plans and intentions. This strategy, which would (if true) revoke China’s status as a “most favored nation” for trade, represents a stark departure from the weak appeasement approach of the Biden administration. The impact of such a tariff would be profound, affecting not only the Chinese economy but also the global market, with repercussions felt by consumers and industries around the world.

Economically, Trump’s aggressive tariff proposal could cause significant disruptions in global trade. The United States and China, as the world’s two largest economies, play pivotal roles in the international market. A tariff of this magnitude could disrupt supply chains, inflate costs for U.S. consumers and producers, and potentially result in substantial job losses. Economists from both political parties have voiced concerns about the destabilizing impact of these tariffs. Erica York, a senior economist at the Tax Foundation, a right-leaning think tank, emphasized the gravity of the situation: “The 2018 to 2019 trade war was immensely damaging, and this would go so far beyond that it’s hard to even compare to that.”

But, again, these are projections from the Washington Post are firmly biased against Trump, supporting the naive and tragic policies of the Biden Administration. The truth is that American companies have been diversifying over several years as China has emerged as belligerent and predatory. Business around the world have slowly become more wary of China’s “ideal” environment, chock full of incentives. Now they are looking to Vietnam, India, the Philippines and a host of other low labor cost countries, which may not have the infrastructure, but have the potential for lower riskmanufacturing.

Trump’s approach to China extends beyond trade. His presidency will likely make decisions regarding technology, intellectual property, and geopolitical influence. The former president’s track record suggests a readiness to confront China on multiple fronts, leading to a potentially more strained bilateral relationship. Trump, on the campaign trail, has been vocal about his stance, stating, “I took on Communist China like no administration in history, bringing in hundreds of billions of dollars pouring right into our Treasury when no other president had gotten even literally 10 cents out of China.”

In response to such aggressive U.S. policies, China’s reaction is likely to be equally robust. Beijing has demonstrated its willingness to retaliate against trade measures in the past and could implement its own tariffs or economic strategies. But China can also be pragmatic and is suffering from an economic downturn right now. While their long term strategy is always domination, they recognize that a short term easing of tensions will make them stronger and allow maneuvering room.

The potential for Trump’s return to power has already caused concern among some international players and anticipation among others. Allies and rivals alike are preparing for the potential impact of his policies on the global stage. The combination of Trump’s unpredictable nature and the current geopolitical climate, including factors like the situation in Taiwan, adds to the uncertainty and potential for conflict. But uncertainty is a two way street, one that China must deal with. Trump is an expert at using circumstances to bring his opponents to the negotiating table.

Donald Trump’s possible re-election and his proposed economic policies towards China represent a significant change in tactics between the two superpowers. The weak approach of the Biden Administration has allowed China to be aggressive in stealing technology, threatening its neighbors and growing its military. Can we make progress again with Trump at the helm? Time will tell.

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