Caixin: US-China Trade Tensions

The Trump administration was warned about the economic and political consequences of protectionist measures like tariffs. Analysts point out that tariffs are illogical, and will fail to reduce the US trade deficit with China or boost jobs. The trade deficit and the jobs will shift to other countries. “It is a mistake to assume that trade is a bilateral issue when it is multilateral, especially in an age when production networks dominate the global trading system,” explains Yukon Huang, author and senior fellow at the Carnegie Endowment for Caixin, adding that products incorporate components from multiple nations. The United States must boost its savings and investment rates to reduce trade deficits, and Huang surmises that US President Donald Trump is trying to appease supporters and coopt one-time union agendas of the opposition Democratic Party. The United States, rather than apply tariffs, could have instead pursued rules-based procedures of the World Trade Organization or not been so quick to withdraw from the Trans-Pacific Partnership in order to shape trends in investment, intellectual property rights and cross-border data flows. – YaleGlobal