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US-China trade war
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Henry Paulson suggested the trade war could make foreign investors reluctant to build a plant in the US. Photo: Bloomberg

Trade war may lose investors’ trust in US, says former Treasury Secretary Henry Paulson

Countries and companies want to deal with stable economic policies, not end up in a tariffs dispute, he says as stand-off continues to escalate

A trade war with China carries “dangerous” long-term risks because companies and nations may pull back from doing business with the United States, former US Treasury Secretary Henry Paulson has said.

“The question really is: is China going to start looking for new markets from which they’re going to buy soybeans?” Paulson said on Thursday in an interview with Bloomberg’s David Westin, suggesting it might turn to Brazil or Africa.

“Are they going to be concerned that they need to protect themselves if there’s another tariff war and they need other suppliers?”

Paulson, who founded a research group that promotes US-China relations, spoke as the trade war between Washington and Beijing continues to heat up.

President Donald Trump’s administration added tariffs on another US$200 billion of Chinese imports this week – the largest escalation of the confrontation so far. China responded with duties of its own on US$60 billion of US products.

“Companies and countries want to do business with the United States because we’ve got reliable, stable economic policies,” Paulson said.

“Are they going to want the US to be a supplier if they think the United States is going to come in and break up the supply chain? Is a foreign investor going to want to come in and build a plant in the United States if they’re afraid they’re going to be in the middle of a tariff war?”

Paulson, 72, has called on the two countries to hold negotiations and establish timelines for China to open its economy.

“This trade war obviously doesn’t benefit anyone,” he said in the interview before remarks at the Chicago Council on Global Affairs. “And the tariff impasse is a serious thing.”

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