Why Further U.S.-China Economic War Seems Certain
Alan Tonelson
China, United States
The days are over when the United States—or at least its political and business leaders—saw mushrooming commerce with China as an expressway to greater national prosperity, higher profits, and a powerful contributor to global well-being.
Ever since President Donald Trump started hiking tariffs on imports from China in the middle of last year, speculation has abounded that his main aim wasn't creating leverage for securing a favorable trade agreement with Beijing, but, rather, spurring a process of decoupling the two economies. As widely noted, disengagement represented a logical economic aim, given the president's conviction that China had been “raping” America on trade. And less commerce with China would reduce U.S. dependence on a country his administration warned was an increasingly powerful and aggressive strategic rival.
With Chinese negotiators back in Washington, DC for a last-ditch effort to keep months-long trade talks on track and prevent the steep tariff increases threatened by Mr. Trump last weekend, the end game sought by the president remains a puzzle. But a new set of official U.S. trade figures issued Thursday morning sent an unmistakable message about the evolution of the bilateral economic relationship: Disengagement is underway, by many measures it's accelerating, and the reasons point to further decoupling however the current and future bilateral negotiations turn out.
Some of the evidence came in the form of multi-year records revealed by the new data—which bring the story up through March. For example, the recently completely January-March quarter saw American goods imports from the People's Republic register their biggest quarterly drop (26.80 percent) on record. (These U.S. Census Bureau records go back to 1985.) That time span covers two garden variety recessions along with the nation's worst economic slump since the Great Depression—all periods when demand for all goods, domestic and especially foreign, drops sharply.
Seemingly less impressive, but still noteworthy, the $20.75 billion March U.S. merchandise trade deficit was the smallest monthly total since March 2014's $20.49 billion. (These and other figures are all presented in pre-inflation terms.)
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