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Abu Dhabi, UAEWednesday 12 December 2018

Donald Trump's trade war with China harms his hardworking supporters

There is still time to pull back from the precipice before the world plunges into chaos

Xi Jinping's China possesses many retaliatory powers against Donald Trump's tariffs. Fred Dufour / AFP
Xi Jinping's China possesses many retaliatory powers against Donald Trump's tariffs. Fred Dufour / AFP

“Trade wars are good and easy to win,” declared US President Donald Trump last month after announcing sweeping tariffs on steel and aluminium imports. The move was opposed by many of the president’s closest advisers, who feared that it would trigger stinging counter-measures from China, Mr Trump’s favourite bete noire and the prime target of the tariffs. Mr Trump, however, justified his decision as a smart and bold action that would even the playing field while fulfilling his popular campaign promise to punish China and other competitors for their “unfair” economic practices. A month later, we are witnessing the beginnings of a trade war between China and the US that could soon engulf the wider world. On Tuesday, Beijing responded to Mr Trump’s tariffs on its steel and aluminium exports by slapping duties on more than 100 US products. Markets in Asia and Europe fell immediately and Standard & Poor’s 500 index plunged to 2.3 per cent.

The argument that the flood of cheap goods from China has been detrimental to American manufacturing is a valid one; it does not, however, negate the fact the Chinese market, despite being partially protected from genuine competition by Beijing, is indispensable to American businesses. This reality cannot be wished away, nor can it be remedied with protectionism. China today possesses retaliatory powers that can hurt the US and in places where Mr Trump’s supporters are concentrated. Last year the US exported soybeans worth $12 billion to China. Beijing’s decision to impose tariffs on soybeans will inflict severe pain on farmers in Trump-supporting states such as Iowa, which depend heavily on exports to China. Mr Trump claims he is working for the good of his country, especially so-called victims of globalisation. There is mounting evidence to suggest his policies – forged in the crucible of personal rancour rather than national interest – are doing exactly the opposite.

Nonetheless, Mr Trump persists. On Tuesday, the White House announced that it will be levying fresh tariffs on more than 1,000 Chinese products, chiefly on tech and electronics. The tariffs will come into effect after a period of consultation with US businesses. Although the list omits everyday consumer products such as clothes, it is ordinary American taxpayers who will inevitably suffer as businesses eventually shift the rising costs of tariff-laden goods onto the consumer. There is some hope to drawn from the fact that most of these tariffs have not yet been enforced. This means there is yet time to engage in talks. Mr Trump must be reminded that trade wars, like all wars, acquire a momentum of their own once they begin. He must pull back from the precipice before the world collapses into a chaos that its people simply cannot afford.