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Outside In | Expect the US-China trade war to come to a showy end, but the tech war to continue
- David Dodwell says the tariff war is really a piece of political theatre that has harmed US and other companies in China as well as global supply chains, but accomplished little else. Meanwhile, US paranoia about Chinese technology grows
Reading Time:4 minutes
Why you can trust SCMP
As the international media speculate breathlessly about whether the US and China will reach a trade agreement to resolve their deepening tariff war before the March 1 deadline, I have news for you: first, quite likely a trade deal will be agreed; and second, this should offer meagre comfort to anyone seriously concerned about improving trade relations.
In my brutally cynical view, the tariff war is more theatre than substance: most of the China exporters targeted and suffering are American, Hong Kong and Taiwanese companies based on the mainland; the ultimate casualties are American consumers who are paying higher prices for a wide range of products; and the main harm is being done to suppliers across Asia who are embedded in global supply chains.
For Trump, there is no political downside. There is a cross-party consensus on the need to get tough on China. In so far as there is pain among consumers at home, little blame is falling on Trump’s shoulders. Even Trump’s beloved soybean farmers agree that if some pain is needed to fix the China trade problem, then it is pain worth suffering.
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If and when Trump declares victory, he will have delivered on a fundamental campaign promise to his core supporters. The fact that irreversible harm has been done, and that the core US-China problems remain unsolved, will be ignored or glossed over.
Why would the end to the tariff war not deliver peace? Because while trade in physical goods is highly visible from a political point of view, it is a sideshow compared to trade in services , investment access to the China market, and China’s technology ambitions.
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Because around Trump is a group of anti-China zealots who believe that the problem with China is that it is an increasingly technologically sophisticated competitor, getting dangerously close to generating innovations that can match and better the best in the world – including the US.
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