Economy

Should the U.S. have tougher trade policies with China?

These past few years, the international scene has been dominated by the so-called “trade war” between the U.S. and China, which has commentators in the U.S wondering if the U.S. should further tighten its trade policies towards China or relax them instead.

Rise of the Issue

In the past decades, China has gradually risen as the second most powerful global economic power, right behind the U.S, thereby posing a threat to American hegemony on the international scene. The Group of 2 (G2) – China and the U.S. – has in the last few years been embroiled in increasingly heated tensions around trade, both imposing restrictions and tariffs on each others’ products. This was further aggravated by Donald Trump’s Presidency, which very much viewed China as a threat to the U.S. economy, to his plan to “Make America Great Again”, and the protectionist trade policies that went with it. Since President Biden came to power, tensions eased a little, but most of the trade policies that were established during Trump’s presidency are still in place today, and raise the question of whether some of them should be revoked or whether the U.S. should continue on the path paved by Trump’s stance on China.

Overall, this debate revolves around a few key issues: whether tougher trade policies towards China would restore or hinder U.S. hegemony, whether they will boost economic growth or slow it down, whether such a position will be favorable to the U.S. on the international scene, and whether imposing so many tariffs protects from chinese competition or harms american business.

Issue Timeline

1949

Red Army Defeats Kuomintang

Mao’s forces won a long civil war, bringing communism to China and beginning a relationship with the U.S. marked by mutual enmity for decades.

1972

Nixon in China

President Richard Nixon visited China, launching a general thawing period that would lead to more normal relations, including trade deals.

1979

U.S. Recognizes PRC

After 30 years of recognizing Taiwan as the legitimate government of China, the U.S. recognized the People’s Republic of China and the countries exchange ambassadors.

2001

China Joins WTO

After a 25-year period of liberalizing its economy, China joined the World Trade Organization, a signal that China would actively engage in the global economy.

2017

WTO Grants China The Status of Market Economy

The U.S. responded by refusing to recognize China’s new status and instead adopted a confrontational National Security Strategy meant to protect the U.S. from trade with China.

2018-2019

Trump Adds New Tariffs on China

Claiming that the U.S.’ trade deficit with China was a national threat, Trump began a trade war by imposing tariffs on more than 1,000 goods from China.

Micro Issues

A.

U.S. Hegemony

Those in favor of stricter trade policies towards China argue that doing so makes the U.S. stronger domestically, while those against believe that it weakens the U.S. internationally.

B.

Economy

Proponents of tough trade policies think that they help the American economy by prioritizing the U.S. market over China’s, while its opponents argue that limiting international trade hurts the U.S. economy.

C.

International Relations

While some believe the U.S. should use its international bargaining power to push for trade agreements to always be at the U.S.’ advantage, some argue that it is wiser to cooperate with other countries and lead through multilateralism.

D.

Economic Sanctions

While some sectors in the U.S. are highly benefitting from the tariffs imposed on China because it removes Chinese competition on specific goods, other businesses have been heavily harmed by them.

Pro Arguments

1.

Tightening trade policies makes trade with China fairer.

The U.S. has been at a disadvantage in the bilateral trade agreements with China, a country that performs economic practices such as selling goods in the U.S. for less than those goods cost in China, which ultimately harms the U.S.

2.

Less international trade means reindustrialisation of the U.S.

As the U.S. stops importing goods from other countries, it needs to find or create new alternatives within the U.S. to produce similar goods, thereby reindustrializing the country and creating new jobs.

3.

Tighter trade policies reduce Chinese access to American technology.

With China rapidly coming close to the U.S. in terms of its technological advancement, reducing Chinese access to American technology prevents the country from potentially stealing some of these technologies and using them to better compete with the U.S. on the market.

4.

Tariffs reduce the federal budget deficit.

Economic sanctions are not just a means to make trade with China more difficult, both also a source of income for the U.S.

5.

A tougher stance towards China sends a signal to other trading partners.

Having a protectionist trade policy moves the U.S. from interdependence with other countries to more independence, and enhances its bargaining power on the international scene.

Con Arguments

1.

Tougher trade policies on China mean less international trade.

Imposing economic sanctions on China and growing the U.S. economy from the inside, means less focus on international trade and the economic advantages that trade brings to the U.S.

2.

Less international trade means less global economic growth.

In a global and interdependent world where economies are tied together in the global market, one major country reducing its trade rate negatively impacts the global economy, which then negatively impacts all national economies, including that of the U.S.

3.

Unilateralism destroys the U.S.’ relationship with global actors.

Moving from interdependence to independence is a self-centered strategy in a world that aims to become ever-more interconnected. It is a move away from collaboration that global partners might not see with a good eye, and which could have negative repercussions in the future.

4.

Excessive tariffs put American businesses at a disadvantage.

Many American businesses rely on international trade, and especially trade with China, to run their businesses smoothly and to make larger margins of profit. Imposing tariffs on Chinese goods raises the costs for American businesses who rely on these goods, ultimately hurting them in the process.

5.

A trade war with China is a form of escalation.

Imposing economic sanctions on a country has far-reaching consequences beyond simply trade and economic ones. These protectionist moves gradually undo all the hard-earned progress that was made in the past decades to improve the relationship between the U.S. and China, who remains one of the world’s largest global powers.