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Don’t Call It a Trade War
Cargo ships berth at a port on May 8, 2019 in Qingdao, Shandong Province of China. (Yu Fangping/VCG via Getty Images)
(Getty Images)

Don’t Call It a Trade War

Irwin M. Stelzer

To talk of a trade war between the United States and China is to misunderstand the magnitude of what the world economic order is confronting. Think of it as Brexit on a global scale. Just as Britain is struggling to separate itself from the European Union, America and China are struggling to separate their huge economies from one another. Not only are the economies involved in this latter separation much larger and much more consequential for innocent bystanders, there is also the added feature of a geopolitical rivalry between a dominant and a rising power, the sort of rivalry that Harvard’s Graham Allison argues has often resulted in military conflict. So replace “trade war,” which is only one aspect of the current conflict, with “decoupling.” America has decided to end its reliance on China as a pool of cheap labor and goods, which has brought with it the decimation of many of its industries and communities and the filching of its intellectual property. China, in its turn, wants to end its dependence for economic growth on the vast American market, a vulnerability Trump or a successor can exploit to prevent China from realizing its goal of displacing the United States as the dominant economic and military world power.

As you read this, Xi Jinping, China’s warlord-in-chief, is closeted with his subordinates, developing a strategy to cope with Trump’s tariffs and other barriers to China’s goods. With his southeastern flank in Hong Kong under threat from protesters, Xi must demonstrate his ability to restore order there while at the same time keeping his state-run economy on course to dominate the industries of the 21st century and eventually displacing America as the leading power in the Asia-Pacific region and, eventually, in the world.

Tariffs are only one weapon in this battle, and a tariff war is one America cannot lose unless it lacks the political will to bear the costs that every victor in every war must tolerate. After all, China needs the massive U.S. market more than the United States needs China’s much smaller one. Another weapon is placing limits on purchases of the adversary’s products. Trump is limiting government purchases of Huawei products, partly for reasons of national security, partly as a bargaining chip in the tariff battle.

Read the full article in the American Interest.

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