Macroscope | Today’s US-China trade and tech decoupling make Trump’s tariff war look tame
- Decoupling policies are playing havoc with global supply chains, fuelling inflation and creating impossible hurdles for businesses
- Worse still, heightened protectionism has led to the formation of new defence alliances, pushing China ever closer to Russia
Sometimes it’s tempting to wish for a return to the “good old days” when China bashing by then-US president Donald Trump focused simply (even if simplistically) on erecting tariff barriers against China. Or we might go back to the days of Japan bashing by the US, decades earlier, using similar tactics.
Trade wars were simple: the US levied punitive tariffs on Chinese and other foreign merchandise imports (often doing more harm to itself than to the target in the process) but otherwise economic life went on much as usual, with trade imbalances and economic relations being scarcely affected.
But, instead of remedying the situation by improving its own competitiveness by means of increased productivity and better trained human resources, the US decided that the best way to get even with the likes of China and other “upstarts” was to wage technology wars against them.
Now, the decoupling which is being promoted in the name of “economic security” through technological and trade barriers is degenerating into something more dangerous as it gets caught up with human rights and other issues that are raised to justify protectionism and economic sanctions.