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OpEdNews Op Eds    H4'ed 11/26/18

Why Trump should, but probably won't, back down on trade war

Author 512502
Message Demi Barclay

Trump has claimed his protectionist agenda will help Americans, while ignoring that much of the current economy and businesses is reliant on free trade and globalization.

In the beginning, Trump cited the main reasons for introducing tariffs were a) the trade deficit, b) national security, and c) protecting intellectual property. Almost a year into the trade war with China and we haven't seen even one of these goals achieved.

The first aim - reducing the trade deficit - is currently failing. America's trade deficit with China has actually peaked at $34.1 billion during the month of September. That's 13% more compared to the same time last year.

Not that the trade deficit was the best measuring tool in the first place. Economists across the board agree that it's not 'losing' to have a trade deficit, as there are too many impacting factors at play.

Trump's deficit numbers also don't show the full picture. They mainly focus on consumer goods and don't take into account trade and service exports such as travel, hospitality, and education - the US actually has a services and trade surplus with China.

Of course, Trump has actually managed to damage the services industries already, regardless of the current trade war. Dubbed the 'Trump Slump', the US's decline in tourism has been attributed to the president's hatefulspeech, tighter visa controls and harsh anti-immigrant rhetoric.

The number of international visitors fell by 4%in the first seven months of 2017, and this contradicts a rise in tourism felt by the rest of the world.

It's hardly surprising - who wants to holiday somewhere where they clearly aren't welcome?

It hasn't happened yet, but targeting the services industries - where Chinese consumers spend approximately $60 billion per year - could be on the Chinese government's radar if more tariffs are put in place.

It's not like they haven't done it before. According to the Washington Post:

During a diplomatic dispute with South Korea last year, the Chinese government banned the sale of package tours to Seoul and Jeju Island. The boycott cost South Korean businesses nearly $7 billion in just a few months, as Chinese tourists obeyed their government's orders to head elsewhere.

So that's strike one. The trade deficit was a flawed goal to begin with, and there's still so much for America to lose if they antagonise the Chinese further.

That brings us to national security. While national security is important, and the lives of Americans need protecting - how do we measure if the trade war is helping with national security?

Look, it's a tough one to grade. Maybe the trade war helps, maybe it doesn't. However, I'd probably point the finger at the statistic that more Americans have been killed in 'firearm-related incidents' domestically in the past 50 years, than in the entire history of US wars.

Statistically speaking, If we're worried about the lives of the people here (although I'd say it's debatable that the president cares about anyone other than himself), then I'd say Trump's focusing his energy on the wrong 'enemy'. For security and safety, I'd be asking: can someone please implement some gun control around here?

So, that leaves us with the last issue: intellectual property and fairer trade practices. Probably the only goal on Trump's list that actually makes some kind of sense.

To quickly summarise what's involved - innovation and technology gives American products a certain 'edge' in the market. However, when businesses want to expand and sell in China, they are required by China's foreign-ownership-restriction laws to form joint ventures with domestic Chinese companies.

These joint ventures often also require the technology transfer, which exposes the technology, patents or ideas to theft. So, for American companies, expanding to China can be a risk.

Unfortunately, so far, the trade war hasn't actually achieved any active reform in China's policies in regard to IP.

Considering that other nations in the WTO such as Japan, the EU and Canada shared similar concerns about China, then it might have been a slightly better strategy to co-operate with these nations and addressing the concerns through the channels available.

It might be a slow process to do things diplomatically, but hey, it's not like the trade-war alternative isn't dragging out with little to no progress other than increased prices for consumers.

So, I'd probably call that a strike three. Cool motive, no results.

As much as I wish that this was a game of baseball - three strikes and Trump is out - unfortunately, it's international politics and Trump is batting for at least the next 2 years. Sad, I know.

The only hope now for IP reform is that Trump and Chinese president Xi can actually come to an amicable agreement at the upcoming G20 summit. They're rumoured to meet up to discuss the trade tensions, but I doubt Trump will 'back down' on any of his bull-headed demands. He hasn't shown flexibility, diplomacy or listened to reason on any other issues during his presidency, so why start now?

Further sources: demachines.com/info/tradewars/


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I'm currently living and working in Berlin. I hold a Bachelor of Communications and Media from the University of NSW.
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