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The US is no sure winner of 2-pronged global trade war

US President Donald Trump Photo: Reuters 

The United States embarked on its journey to a superpower in earnest only after the country and its allies fought a two-pronged war to defeat Nazi Germany and imperial Japan in World War II. After that, the U.S. kept a long-standing national strategy to fight and win a two-pronged war, one front in Europe and the other in Asia again in a possible third World War.

The much-dreaded third World War with gun and artillery fires did not take place, but another global war without visible flames is taking shape or virtually kicked off, it is a global trade war and this time the war was ignited by the United States, and it is fighting a two-pronged war again with no allies and by no means a sure winner.

“America first” was true this time, Uncle Sam pointed his gun and fired the first shots at Canada, Mexico and the European Union countries, unfortunately the decades-old closest allies and immediate neighbours of the United States, with the Trump administration slapping a 25 percent on steel and 10 percent on aluminium from these countries on a ground “ to rehabilitate the steel and aluminium industries in America which are crucial for the national security”.

True, these industries might be crucial to the national security of the United States as a superpower, but these sectors should not be rehabilitated by shutting out foreign competitors, a practice obviously contradicts the free competition and market economy which the United States itself had been preaching or safeguarding for decades. Additional tariffs on foreign steel and aluminium simply means mere protection for its own.

No country or government can afford to wave white flags and surrender to any war threats or willing to be an easy prey to a predator in global trade, Canada, Mexico and European Union countries hardly wasted any time to fight back and retaliated by imposing similar tariffs on U.S. products, ranging from farming products, textiles, jeans, drinks, motorcycles and steel products. The trade war began to flare up on the trans-Atlantic front.

If the U.S. extra tariffs on foreign steel and aluminium could protect and rehabilitate its own industries remains a big question, but other sectors of the American economy were already bound to fall prey to retaliatory measures from its trade partners, and the U.S. steel and aluminium can by no means be spared from the same penalties the U.S. inflicted upon others.

Almost in a parallel development, the Trump administration opened its second or the trans-Pacific war front by announcing a 25 percent additional tariff on 34 billion-USD Chinese products and another 16 billion USD under consideration, the two countries enjoyed a short-lived truce in May after China agreed to buy more from the United States to narrow the bilateral trade imbalance which the U.S. said standing at some 375 billion dollars a year in China’s favour.

It only took hours for Beijing to respond by accusing Washington of starting a trade war. Chinese ministries of finance and commerce announced additional tariffs of 34 billion USD worth or 545 items of American agricultural products, automobiles and sea food, starting from June 6, and another 16 billion USD worth or 114 U.S. items under consideration and will start later, including chemicals, medical equipment and medical products.

China said it did not want a trade war, but the U.S. move forced a trade war on China and it would strike back with matching scale and intensity in a bid to stop a war by a war, Beijing also nullified the results from earlier talks and blamed Washington for flip-flopping and harming and threatening the interests and security of China.

It does not augur well for the world economy if an all-out trade war breaks out between the two largest economies, and even the muscle flexing of the two economic giants on the brinks of a trade war sent chills down the spines of the international financial markets.

Washington harvests nothing from the two-pronged trade wars it ignited but tit-for-tat or rather teeth-for-teeth tariffs and retaliations from the European Union, Canada, Mexico and China as well, even the smartest mathematician could not figure out which side could emerge victorious from a zero-sum game, nobody can be sure as to how merchant-turned U.S. President Trump would calculate on the final result of a zero-sum game.

It remained to be seen if the scenarios of America’s two pronged trade war would be confined and limited to a controllable extent or evolve to an all-out, full-swing global trade war which could well spill over to political and diplomatic relations between the countries concerned.

Nobody disputes the political, military and economic might of the United States as the world’s sole superpower, and equally nobody could be sure if the U.S. is able to win a global trade war as it is fighting against economic globalization and free trade which had become a global trend and was recognized and accepted by the world community as a whole and even the United States itself had fervently advocated for such an global economic and trade order over the years before it reversed its own course.

And also, the United States has no allies in a looming global trade war, the “American first” policy by the Trump administration in its trade policy and foreign policies at large does sound selfish, unflattering to others and unilateral in nature, and such a policy has driven a wedge and virtually ruled out win-win cooperations between the United States and its trade partners, and the policy itself would be a flashpoint for future disputes.

If Mr. Trump sticks to his “America first” policy without considering the interests of others on an equal footing, he will surely be a disruptor of the global political and economic orders, but the United States is not a sure winner if it becomes a public enemy to the whole world community, and this is particularly true when global trade is concerned.     

The World Bank, the International Monetary Fund have warned against the escalation of trade wars which would dampen the outlook of global economy.

Business associations, trade groups and large companies within the U.S. also stepped up their opposition and criticism against Trump’s resort to tariffs to solve trade disputes or imbalances and urged governments to sit down for negotiations, including the U.S. Chamber of Commerce and Business Round Table, and U.S.-China Business Council. 

“Cooperation means mutual benefits whilst conflict brings mutual harms” is a centuries-old Chinese saying, it is also true and can not be truer in global trade.   

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