Why America must Avoid a Trade War With China
Avoiding a trade war with China must be the prime directive of American foreign policy. In fact, I do not think the United States could afford or survive a trade war with China.
Frighteningly, some elements in the Trump administration seem hell-bent on waging an all-out trade war with China. For instance, National Interest executive editor Harry J. Kazianis claims a few Trump officials want to “crush China,” in a bothersome American Conservative piece.
Kazianis claims an anonymous Trump official even told him, “America’s strategy when it comes to China is easy to understand: crush them. Drive them into the ground.”
Fortunately, Donald J. Trump’s (R-New York) behavior towards China has been very civil and restrained. However, just the hint that some Trump advisers hold such sentiments could poison America’s relationship with the People’s Republic.
America cannot afford a Trade War with China
We should fear “crush China rhetoric” because America cannot afford a trade war with China. In addition, I do not think the United States can afford any conflict with the People’s Republic.
An all-out trade War with China could lead to an economic crisis as bad as the Great Depression of the 1930s. To explain, the United States Trade Representative estimates the value of American trade with China at $710.4 billion in 2017.
Hence, the sudden interruption of US trade with China will cause $710.4 billion; and nearly one million jobs, to disappear from the US economy. In fact, the Trade Representative estimates 911,000 American jobs depended on Chinese trade in 2015.
Disturbingly, I think the impact of a Trade War with China could be far greater. To clarify, I believe a trade war with China will wipe out over $1 trillion worth of economic activity; and two or three million jobs.
Moreover, the prices on an incredible variety of US consumer goods could explode without Chinese suppliers. Notably, the average cost of a pair of athletic shoes in America fell from $61.15 in 2015 to $58.16 in 2017, Statista calculates. However, without Chinese suppliers the cost of those shoes could quadruple to $232.64.
Average Americans could no longer Afford a Middle-Class lifestyle in a Trade War With China
Obviously, many American families could no longer afford athletic shoes during an all-out trade war. Moreover, shoes are just the tip of the iceberg, a vast number of items that Americans rely on every day come from China.
Therefore, a large segment of the American population could no longer afford a middle-class lifestyle during a trade. That sounds like a perfect recipe for political and potentially civil unrest. For example, few Americans will want to go without smartphones, computers, video games, and TV sets – all of which come from China.
Under those circumstances, working class crowds could go from wearing Trump hats to burning the President in effigy overnight. Additionally, it will be impossible for the administration to get any popular support for the trade war.
How America Will lose a Trade War with China
Thus, average Americans will lose even if America “wins” a trade war with China. To explain, average Americans will experience a great deal of suffering so a few neoconservative blowhards in Washington can brag about “beating China.”
Essentially, the United States will have to return to 1930s levels of economic activity to survive a trade war with China. For instance, much of the population will have to do without new consumer goods for years; or never, to harm the People’s Republic. In addition, the United States could have to endure several years of 25% or 30% unemployment.
Obviously, average Americans will not tolerate such conditions for long. Americans will express their displeasure with the trade war at the ballot box and in the streets. A likely scenario is that voters will throw out the majorities in both houses of the US Congress as they did in 1930.
I believe a trade war with China will lead to civil unrest; including riots, that will be far worse than the anti-war protests of the 1960s. The violence will be worse tens of thousands of angry unemployed workers will swell because the protesters’ ranks. In particular, mobs could loot and burn the Trump Tower, and Mar a Lago before marching on Fox News headquarters.
A Trade War with China makes no sense
A US trade war with China makes no sense because the risks and costs of such a conflict far outweigh the gains. Moreover, a Cold-War style conflict with China is unnecessary because the People’s Republic is not a direct threat to the United States like the Soviet Union was during the Cold War.
First, unlike the Soviet Union, the People’s Republic of China is not a direct threat to American national security. Notably, China is not financing anti-American revolutionary movements and hostile Communist regimes. In addition, there are no Chinese soldiers or nuclear weapons in Cuba.
Second, the People’s of Republic of China is not a threat to America’s allies overseas. For instance, the Chinese are not occupying neighboring nations and imposing brutal puppet regimes on large areas of Eastern Europe. In fact, the People’s Republic is not directly occupying any piece of territory that is not historic Chinese territory.
Third, there is no ideological conflict between the People’s Republic and the United States. Yes, a self-proclaimed “Communist Party;” that pays lip service to Marxist and Maoist dogma, rules China. In practice, the People’s Republic is an authoritarian capitalist system dedicated to profit not revolution. Revealingly, China unlike the Soviet Union, is not financing Communist subversion and revolution worldwide.
In fact, China and America share the same basic economic ideology: capitalism. Obviously, the nations differ on governmental systems. However, history proves an authoritarian regime like the People’s Republic and a populist democracy like the United States can easily coexist. For example, the United States maintained good relations with authoritarian rulers; like Spain’s Francisco Franco and the Saudi Royal Family, for decades.
China could beat America
Finally, Americans must learn that China could beat the United States in a trade war or Cold War.
Significantly, China has an effective and functional capitalist economy unlike the Soviet Union. In fact, China could become the world’s largest economy as soon as 2020; next year, Standard Chartered Bank predicts. To explain, Standard Charter’s analysts think China’s Gross Domestic Product (GDP) could exceed America’s next year.
Hence, for the first time since the War of 1812 the United States could face an opponent with more money than America. Notably, the War of 1812 did not go well for America. In fact, British troops looted the White House and burnt Washington DC. Moreover, the only reason the United States survived the War of 1812 was the British Empire was busy fighting Napoleon.
Why China win will a 21st Century Cold War
Furthermore, things get could much worse. Notably, The Visual Capitalistclaims the United States could be the world’s third largest economy behind China and India by 2030. Under these circumstances, China could win a 21st Century Cold War the same way America won the last Cold War.
To explain, America won the 20th Century Cold War by outspending the Soviet Union. In fact, Mikhail Gorbachev ended the Cold War because the bankrupt Soviet Union could not afford to keep up with American military spending. Essentially, the Soviets ran out of money in the 1980s because of their dysfunctional economy.
Hence, China could win a 21st Century Cold War the same way. Moreover, China could have more than twice as much money as America within a decade. In fact, The Visual Capitalist theorizes China’s GDP will be $64.2 trillion in 2030, while America’s 2030 GDP will be $31 trillion.
America as Number Three
Moreover, India will be the world’s second largest economy with a GDP of $46.3 trillion, if The Visual Capitalist is right. Hence, America will have to get used to being the world’s number three power.
Under these circumstances, America’s logical course of action is to be very nice to China. America cannot afford any conflict with the People’s Republic. Thus, avoiding a conflict with China must be the top priority of a US President.
Hopefully, Donald J. Trump and his successors will learn that lesson. Instead, our leaders should focus on economic growth and social reform rather than seek needless and potentially catastrophic conflicts.