Trump is misjudging China’s resolve on trade: Bloomberg

Trump’s true purpose of launching a trade war against China has been revealed in a latest article by #Bloomberg on July 13, arguing that the extra tariffs on China mean a longer trade war, with greater damage to the US economy.

Entitled “Trump is misjudging China’s resolve on trade,” the article reported that Trump’s strategy in his trade war with China is to eventually force China into concessions by inflicting sufficient economic pain. That’s the obvious purpose of the $200 billion in additional tariffs he plans to impose on Chinese-made goods.

Trump’s latest moves are a reality show before midterm elections to make him appear tough. But the approach is also mired in misperceptions—and bluntly, plain ignorance—of modern China. To Trump and his advisers, China appears poor, dependent on America, and susceptible to coercion. The reality is that China is a global economic force and that China’s leaders will not be so easily intimidated, the article emphasized.

Team Trump’s first big miscalculation is over economic leverage, according to the article. Because China exports more to the US than vice versa, the Trump administration reckons it has the upper hand. Stephen Moore, a Heritage Foundation fellow and former Trump economic adviser, claimed that the “Chinese economy cannot grow without access to the US market.”

The facts suggest otherwise, it noted. China is now a $12 trillion economy, and far from vulnerable. Julian Evans-Pritchard, senior China economist at Capital Economics Ltd., said in a July 11 report that the total $250 billion of exports facing US tariffs represents only 1.3 percent of China’s GDP, and the damage done by those tariffs might be only around 0.5 percent of output.

The article went on pointing out that Trump is assuming Chinese companies and workers will bear the brunt, but that ignores global supply chains. Hannah Anderson, global market strategist at J.P. Morgan Asset Management, commented recently that “the majority of the value in the imports the US has imposed tariffs on so far comes from other countries besides China.” The tariffs will punish US consumers and companies with higher prices, costing jobs, profits, and growth and roiling financial markets.