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Your guide on what Trump's second term for Washington, Business and the World means
Donald Trump's “Liberation Day” So-called “reciprocal prices” against the rest of the world – Without doubt, the most eccentric commercial policy proposals ever made – after a hasty retirement under the fire of the markets, turned into a trade war with China. This may (or may not) have been what was planned from the start. So, can Trump win this war against China? Indeed, can the United States now after Trump's second coming, hope to succeed in its wider rivalry with China? The answers are “no”. It is not because China is invincible, far from it. This is because the United States throws all the assets it needs if it is a question of maintaining its status in the world against a power as enormous, capable and determined as China.
“Trade wars are good and easy to win”, Trump poster In 2018. As a general proposal, this is false: commercial wars hurt both sides. An agreement could be concluded which makes both sides better than before. More likely, any agreement will make one side better than before and the other worse. This last agreement is probably what Trump hopes that the United States will win: the United States will win; China will lose.
Currently, the United States imposed a tariff of 145% on Chinese imports, while China imposes a rate of 125% in the United States. China has also limited exports of “rare earths” in the United States. These are very high obstacles, in fact prohibitive, to trade. It looks like a “Mexican impasse”, which cannot win, between the two superpowers.
We are given to understand that the American plan (if there is one) is to “persuade” business partners to impose strong barriers to imports from China in exchange for a favorable trade agreement (and perhaps in other areas, such as security) with the United States. Is this result plausible? No.
One of the reasons is that China also has powerful cards. Many important powers are already doing more business with China than with the United States: it is in particular Australia, Brazil, India, Indonesia, Japan and South Korea. Yes, the United States is a larger export market than China for many important countries, partly because of the trade deficits that Trump complains. But China is also an important market for many. In addition, China is an essential source of imports, many of which cannot be easily replaced. Imports are, after all, the goal of trade.
Above all, the United States has become unreliable. A “transactional” is always looking for a better deal. No healthy country should bet its future on such a partner, especially against China. Trump treatment of Canada was the decisive moment. The Canadians responded by re -elevating the Liberals. Will Trump draw from it? Can a leopard change its places? That's who he is. He is also a man that American voters have elected twice. In addition, the break with China would be risky: China will not forget and it is unlikely to forgive.
In particular, China thinks that its people can have economic pain better than Americans. In addition, for this, trade war is mainly a demand shock, while for the United States, it is mainly a shock from the supply. It is easier to replace the lost demand than the missing supply.
In short, the United States will not get the offers she seeks apparently and the victory over China she hopes. My hypothesis is that, as it becomes obvious to the White House, Trump will at least partially withdraw from his trade wars, declaring victory, while advancing in another direction.
However, this does not change reality that the United States is indeed in competition with China for global influence. Unfortunately, the United States that many want to do This WE.
In addition, Trump's United States will not do well. Its population is a quarter of that of China. Its economy is about the same size, because it is so much more productive. Its influence, cultural, intellectual and political, is even much greater than that of China because its ideals and ideas are more attractive. The United States had been able to create powerful alliances with countries sharing the same ideas that strengthen this influence. In short, he inherited and was therefore blessed with huge assets.
Now consider what's going on under the Trump diet: tries to transform the rule of law into an instrument of revenge; the dismantling of the American government; contempt for laws which are the foundation of the legitimate government; attacks against scientific research and Independence of major American universities; wars on reliable statistics; hostility to immigrants (and not only illegal), even if they were the foundations of American success at each generation; A Pure and simple repudiation of medical sciences and climate sciences; A pure and simple rejection of the most fundamental ideas in the business economy; An equivalence or (much worse than that) the preference for Vladimir Putin, the tyrant of Russia, on Volodymyr ZelenskyyHead of Democratic Ukraine; And to open the contempt for the range of alliances and cooperation institutions on which the World Order rests built by the United States. All this is in the hands of a political movement which adopted the insurrection of January 2021.
Yes, world economic order needed improvement. The case so that China moves to growth led by consumption is overwhelming. It is also clear that a lot of reform is necessary in the United States. However, what is happening now is not a reform, but the ruin of the foundations of American success, in the country and abroad. It will be difficult to reverse the damage. It will be impossible for people to forget who and what caused him.
A We who try to replace the rule of law and the constitution with corrupt capitalism will not surpass China. A purely transactional United States will not receive unreserved support from its allies. The world needs an United States that contributes and cooperates with China. We, alas, will not manage to do well.
