Trade War Hurts Both China and U.S. But Hasn’t Changed Chinese Behavior

Tit-for-tat tariffs now tack on about 20% to the cost of U.S. and Chinese exports, and U.S.-China trade relations are likely to remain fraught no matter who wins the White House in November.

Journalists covering the issue can dig into data about who has been harmed most – and they should also tell the story of how globalization could be unraveling, three experts said in a briefing for the National Press Foundation.

Bob Davis, senior editor at The Wall Street Journal and coauthor of the new book “Superpower Showdown: How the Battle Between Trump and Xi Threatens a New Cold War,” said China’s decision to expel U.S. journalists based in Beijing will worsen public understanding of the critical issues dividing the superpowers. The decision, retaliation for a Trump administration crackdown on Chinese visa holders in the United States, was particularly unfair and ill-advised, Davis said, because it targeted Chinese-born U.S. citizens like his coauthor, Lingling Wei, who have personal deep ties in both countries and excellent sources.

Davis, who has covered trade issues since 1991, described the U.S.-China relationship as a “romance gone bad.” The year 2008, when the two nations worked together to pull the global economy out of recession, was the high-water mark.

The downward spiral in the relationship preceded the election of President Donald Trump and some degree of disengagement will likely continue whether or not Trump is re-elected in November, he said. While a President Joe Biden would likely be softer on China rhetorically, he would be unlikely to repeal a tariff regime that now affects most Chinese imports without extracting concessions from Beijing in return, Davis said.

However, the tariffs that were meant to hurt China most have in fact hit U.S. manufacturing supply chain hardest, argued Mary Lovely of the Peterson Institute for International Economics and a professor at the Maxwell School of Business at Syracuse University.

Lovely described the U.S. tariffs as an “own goal,” a soccer term that refers to a player shooting into their own side’s goal and giving an embarrassing boost to their opponent. While the administration’s initial goal was to combat intellectual property theft and protect American manufacturing jobs, its policies have instead hurt manufacturers and jobs, she said.

Chinese importers absorbed the tariffs, but the tariffs did not protect U.S. jobs, Lovely said.

The original policy of forcing China to buy more from the United States is now evolving into one of forcing “decoupling,” or the disengagement of the U.S. and Chinese economies.

But it’s a mistake to view decoupling as a bilateral phenomenon, since other nations in the global trading system have stepped in, she argued. China lost 4% of the U.S. market for tariffed goods but the gap was quickly filled by Mexico, Vietnam, the European Union and Taiwan. Supply chains won’t come back to the United States unless the barriers and costs are very high, Lovely said.

Both Lovely and Huiyao “Henry” Wang (bio, Twitter @CCG_org @HuiyaoWang) agreed that China has been lagging in meeting the targets for importing U.S. goods that were agreed on under Phase 1 of the U.S.-China trade deal. That’s mostly due to the pandemic, they said. The goal is a $200 billion increase in U.S. exports of energy, agricultural manufacturing and other goods to China over the next two years.

However, Wang, founder and president of the Center for China and Globalization, said China did step up its imports sharply in the first quarter of 2020. It imported more than $5 billion in U.S. agricultural goods, up 110% compared with 2019, Wang said.

With the pandemic, China has become an even more important trading partner for the U.S., because China is still growing while other world economies are shrinking, Wang argued. In April, U.S. trade with China rose more than 40%, while its trade fell with Mexico, Canada, India, France, Israel and Russia all decline between 40% and 49%, Wang said.

Despite the poor relations between Beijing and Washington, nongovernmental cooperation on fighting coronavirus has soared, with members of the American Chamber of Commerce in China donating more than $74 million in cash, personal protective equipment and other medical supplies to China, Wang said. Meanwhile, Alibaba founder Jack Ma and his company, as well as other Chinese charities, have made extensive donations of medical supplies abroad.


This program is funded by the Hinrich Foundation. NPF is solely responsible for the content.


Bob Davis
Mary Lovely
Economics professor, Syracuse University
Huiyao (Henry) Wang
President, Center for China and Globalization
Full discussion
Mary Lovely on numbers on the US-China trade war
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