The Many Reasons Why China Cannot Win a Trade War with the United States
The world has failed to hold China accountable for both human rights and trade abuses for far too long. The Chinese Communist Party is the only governing authority of a major industrialized economy that has consistently held millions in concentration camps, flagrantly violated even the most basic trade practices, and even refused to provide basic transparancy during the recent pandemic. There has been a complete failure in Washington by both establishment Democrats and Republicans for years to hold China accountable. Corrupt politicans in past years of both parties were largely controlled by money coming from Corporations reliant on Chinese markets.
President Trump does not answer to any special interest other than the American people. The 47th President cannot be bought, and he is determined to force China to play by the rules and stop ripping off the United States. While the American people have for years been lied to and told that the US could not stand up to the CCP without grave consequences, the reality is the United States has all the leverage in dealing with our Chinese counterparts. While China is trying to project strength and save face in the current trade conflict with Trump, the President holds all the cards, and he knows that.
China’s economy is much weaker than the US right now. The world’s second-largest economy is dealing with a housing crisis and very high levels of consumer debt. Household-to-GDP debt levels in China have reached nearly 60 percent today. The United States also has a $295 billion dollar trade deficit with the Chinese. Xi Jinping wants to show strength and save face, that’s why the CCP responded to Trump’s reciprocal tariffs by recently announcing new 84 percent tariffs on US goods.
The main reason China can’t afford to wage a trade war with the United States is America does not need to import goods manufactured in the world’s second-largest economy as much as the Chinese need to export to the US economy. The longer the Chinese wait to cut a deal with Trump, the more likely that US companies will simply turn to other markets and create new supply chains that have the potential to permanently displace China’s role as the main manufacturer of goods sold into the American economy. China needs us much more than we need them. There are many countries that can make cheap goods. There are not many countries with 30 trillion dollar economies and consumers willing to buy China’s many products the country imports here.
Trump is playing chess well most world leaders are playing checkers, and the 47th President has maneuvered brilliantly. Trump just announced a 90-day waiver for every country but China on tariffs, so if the Chinese don’t want to negotiate with the President, companies are simply going to seek to establish new supply chains outside of the world’s second-largest economy. American Corporations have very strong balance sheets, these companies have the cash and resources to rebuild manufacturing centers outside of China, including some obviously being established in the United States. The President wrote the Art of the Deal, and he understands the key to any negotiation is leverage. Trump has the leverage with China right now, and he knows that this is the best time for America to restructure US-Chinese trade agreements for years to come.
