Not surprisingly, China has once again become a key topic in the current US presidential campaign. Issues concerning China-US economic and trade relations, in particular, will be exploited by the Republican and Democratic candidates to express their stance on China and impress voters.
Republican presidential nominee Donald Trump said earlier last week that trade enforcement with China would be the centerpiece of his economic plan, accusing China of breaking trade rules in every way imaginable.
Democratic presidential nominee Hillary Clinton said Thursday that she would get tough with China and anyone else who tries to take advantage of American workers and companies. She hinted that she would impose targeted tariffs if China broke trade rules.
After witnessing the US presidential elections over the years, China has more or less gotten used to the way that American politics works, and expects anti-China rhetoric during the campaigns.
The US trade policy toward China is already showing a strong tendency of protectionism. This can be seen in the increasing cases of US anti-dumping and anti-subsidy investigations against Chinese products, an inconsistent stance on China's market economy status as well as US-initiated regional trade organizations designed to discriminate against non-members, including China. Additional new trade protection measures by Washington would be of no surprise to China.
In Trump's case, he seems to be bolder and go further in his rhetoric as he has threatened to impose new tariffs on Chinese products on numerous occasions during his election campaign. Trump believes that higher tariffs on China would boost the US economy and improve the country's international competitiveness. His tough stance sounds serious but this is only one of his negotiating strategies in doing business. He is good at bluffing and forcing his client to make concessions. When a client is not fooled by his bluffing, he will take whatever he can get.
It would not be feasible for the US to impose additional tariffs on Chinese goods. Even if Trump was elected, the US is not Trump's company and will not be run under a one-man rule. Imposing new tariffs on Chinese products involves complicated legislative procedures, as well as clashes between different interest groups inside the US. Although there are some Americans whose interests are impaired due to trade with China, more people benefit from Chinese trade and would not support Trump's decision. Besides, both the US and China are members of the World Trade Organization (WTO) and any trade disputes that arise should be settled under the WTO framework. If the US unilaterally imposes extra tariffs on China, it would damage the WTO rules and possibly overturn the global multilateral free trade system that countries around the world have worked so hard at establishing.
Moreover, the US cannot afford to bear the high cost of imposing additional tariffs on Chinese products. China has already lamented the existing US trade restrictions and would definitely not accept a move to levy extra taxes on Chinese exports. It is also quite probable that China would hit back if this tax levy option becomes a reality, a move that China has sufficient means to do so given its economic strength. Any meager benefit the US would gain from imposing further tariffs on China would not offset any greater economic consequence that comes with it.
More importantly, levying extra tariffs cannot fundamentally reverse the huge trade deficit the US currently has with China. Americans used to believe that the low exchange rate of the yuan was the culprit behind the US trade deficit with China. But now Americans know that appreciation of the yuan does not change the situation. In the era of globalization, the US trade deficit with China is a reflection of its trade deficit with the rest of the world. If the US is not committed to adjusting its own economic structure, its economic relations with the rest of the world will not change and the trade structure between the US and China will remain the same.
The trade protection stance held by the US presidential candidates indicates a tendency towards economic introversion in American society. In a mediocre era of persistent low growth, American politicians seem more inclined to make a fuss over globalization by targeting American's economic rivals and those who benefit from globalization. China falls into both camps and thus becomes a target. What is worrisome is that if the US does pull back on globalization, it will not only damage its economic and trade relations with China but also pose grave challenges to global investment and trade. The US presidential candidates have laid out their international economic policies, which will only bring tremendous uncertainty to the global economy and become a new source for policy risks. Such tendencies needs to be checked and contained by the international community.
