A US-China trade war would benefit no one, least of all Americans

Bernard Chan says policymakers should stay calm despite the heated rhetoric and consider the bigger picture. A rash move by Donald Trump to impose tariffs on Chinese imports would be disastrous

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Corn is harvested in Illinois, US, this week. If the US does impose a tariff on Chinese imports, China could retaliate by putting up barriers to US aircraft, grain and other products. Photo: Bloomberg

Published: 12:23pm, 12 Oct 2017Updated: 12:58pm, 23 Mar 2018

Are the United States and China heading towards a trade war? The consequences for the whole world could be disastrous. The good news is that it does not need to happen if policymakers on both sides stay calm, remember some basic economics and look at the bigger picture.

Even before he was elected president, Donald Trump made it clear he was unhappy with the US trade deficit. Most economists see free trade as a positive thing that increases overall wealth. But many US politicians, and business and labour leaders, take a far narrower view.

For the last few decades, they have seen traditional domestic industries decline while overseas competitors rise. At the same time, emerging economies such as China have protected domestic markets from foreign competition to develop local industries. They conclude that imports are bad and exports are good – and the imbalance is unfair.

US President Donald Trump is unhappy about many US trade relationships, notably the Nafta arrangement with Canada and Mexico. But China – the world’s biggest exporter – looks like his No 1 target. Photo: Bloomberg

Trump’s China visit will help prevent trade war, Chinese ambassador says

Trump is unhappy about many US trade relationships, notably the Nafta arrangement with Canada and Mexico. But China – the world’s biggest exporter – looks like his No 1 target.

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