Monday, 6 February 2017

Will Trump take on China?

During his election campaign, Donald Trump accused China of being responsible for the loss of American jobs. Some doubt, however, that as president, Trump will be willing or able to take action against China.

Komal Sri-Kumar, president and founder of Sri-Kumar Global Strategies, wrote in a Bloomberg article that Trump’s tangle with Mexico may dissuade him from taking on China.

Sri-Kumar argued that limiting Mexican imports with tariffs would actually also affect US jobs and raise prices for US consumers.

“Such considerations probably explain why Trump’s initial focus has been Mexico rather than China,” he wrote. “Action on his part could be met by Chinese retaliation limiting access by U.S. multinationals to the country's estimated 300 million middle- and upper-income consumers, which would significantly affect the companies’ growth prospects.”

Jeffrey Sachs, University Professor and director of the Center for Sustainable Development at Columbia University, made a similar argument in an article for The Boston Globe.

Sachs said that the idea of cornering China is unwise.

“Trump blames China for the plight of American workers left unemployed by China’s exports to the United States, but he fails to understand or acknowledge the many gains to the United States from our trade with China, including the higher profits and wages of US companies exporting to China and the lower costs enjoyed by US consumers of China’s exports,” he wrote.

Sachs also thinks that restraining China is unachievable.

“China,” he pointed out, “has a larger economy, is four times more populous, and is America’s creditor, not its debtor. China has strong and growing trade, investment, and diplomatic relations with other countries all over the world that would likely be strengthened, not weakened, by US belligerence.

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