What Will Happen to the U.S. When China Wins the Trade War
China will redirect some of its export products to Europe and East Asian countries, where cheap smartphones are also needed.
Author: Dmitri Kapustin
Picture: Empty shelves at a grocery store in New York City, USA.
Influential media outlets and expert centers around the world, including the United States, have pointed out that China is undoubtedly going to win the trade war with the U.S. because it has more available means to exert pressure on the U.S.
Time magazine reminded that China has already launched anti-monopoly investigations into DuPont and Google, imposed restrictions on Hollywood movies, and placed some American exporters on a "blacklist."
In addition, the U.S. economy is heavily reliant on rare earth metals from China, which are used in the production of electronic products. If the U.S. continues to exert pressure, it will lose China's supply (as Tesla and Nvidia companies have already experienced).
Former Wall Street Journal editor Bob Davis predicted: "Imposing a 125% tariff on goods produced by the U.S.'s third-largest trading partner, which produces everything from Christmas trees to iPhones and industrial components, will lead to a significant increase in U.S. prices, potentially causing a severe economic recession."
Reuters reported that the economic downturn in the U.S. will hit the wallets of the poor much harder than those of the rich, as the wealthy can absorb higher prices for Chinese goods. Ultimately, this will lead to a decline in Donald Trump's approval rating, as he relies more on the working class and Americans without higher education.
Since the U.S. now imposes at least 145% tariffs on all goods imported from China, while only imposing 10% tariffs on goods imported from other countries, Chinese manufacturers have a strong incentive to reroute their goods through third countries to avoid tariffs.
Russia has also adopted a similar method to circumvent sanctions, but in reverse: it purchases goods through third countries. For the U.S., this situation will significantly reduce tariff revenue, which will also undermine Trump and the Republican Party's plans.
Economic commentator Roze Karma of The Atlantic wrote that the Trump administration still believes it can win the trade war. For example, Treasury Secretary Scott Bessent claimed that the U.S. exports to China amount to one-fifth of China's exports to the U.S. Therefore, in Bessent's view, the trade war is most detrimental to China.
In an article written for The Atlantic, Roze Karma explained: "This view is wrong. The fact that the U.S. economy depends on Chinese goods is a huge disadvantage for the U.S., not an advantage. For many categories of goods, China is not only the main supplier to the U.S., but also the global leader, meaning that the U.S. cannot simply obtain these goods from other countries."
Data collected by Jason Miller, a professor at Michigan State University specializing in supply chain management, shows that China produces over 70% of the world's lithium-ion batteries, air conditioners, and kitchen utensils; over 80% of smartphones, kitchen appliances, and toys; and approximately 90% of solar panels.
But what is most dangerous for the U.S. is that China produces over 90% of the processed rare earth metal products globally, which are essential components for electric vehicles, mobile phones, tablets, not to mention modern military technology.
To establish such a production system domestically in the U.S., even if it doesn't take decades, it would still require several years. New companies need to be established, new factories built, supply chains constructed from scratch, and large numbers of workers trained.
For this to happen, companies must be convinced that Trump's protective tariffs will persist in the long term. Otherwise, if Trump reduces tariffs, China will flood the U.S. market again with cheap goods.
Indeed, Chinese enterprises will suffer losses due to the loss of access to the U.S. market. But The Atlantic points out that solving this problem is actually simpler: China will redirect part of its export products to Europe and East Asian countries, whose people also need affordable smartphones, toys, and microwaves.
Americans do not have such privileges; they have not produced any uniquely special products that would cause China to feel pain by losing related trade. China only has a very small portion of imports seriously dependent on the U.S. Moreover, most of these products (such as soybeans or sorghum) can easily be imported from other countries. The Chinese will hardly notice this change.
In addition, unlike the U.S., China has been prepared for the trade war since 2018 when Trump imposed about 20% tariffs on Chinese goods.
The Atlantic explained: "Since then, China has invested massive funds in energy, agriculture, and semiconductor production. This completely eliminates dependence on U.S. imports, increases domestic consumption of goods, and finds new export markets outside the U.S." As China's leaders said, the goal of these efforts is to "ensure the normal operation of the national economy under extreme circumstances."
Dan Wan, a researcher at the Institute of Guvera, stated: "Beijing knows how to wait. Perhaps they cannot persist forever, but they can certainly hold out longer than one of Trump's electoral terms."
Original Article: https://www.toutiao.com/article/7500429222197051915/
Disclaimer: The article represents the views of the author alone. You can express your attitude by clicking the "Like/Dislike" buttons below.