In that sense, Trump and the Republican Party are not so different from the President of the United States Joe Biden and the Democratic Party. The Biden-Harris administration was maintained most of Trump’s tariffs on China and strengthened it focus in the high-tech sector—especially electric vehicles and batteries, which China has dominated. Politicians in both major parties expressed concerns that the United States national security could be compromised if it is unable to build its own clean technology and that it could they stay further behind in a sector that is important to the renewable economy of the future.
In his second presidential campaign, Trump proposed more tariffs: a 10 percent tariff in each introduction, a 60 percent tariff on all Chinese imports and a 100 percent invoice on all cars made outside the U.S. That worries many economists because these sweeping tariffs, along with other Trump tax proposals, could cost Americans 500 billion dollars per annum, a burden that would be borne disproportionately lower income householdswhich rely more on cheap imports.
Observers may wonder whether the resulting economic headwinds would prevent the US from imposing such high tariffs if Trump were to return to the White House. The answer is probably not. History shows why the administration would pursue a policy agenda that would harm average Americans.
The US has always is estimated to be at the technological frontier. After First World War and World War IIwhen other Allied countries sought land and money as war reparations from Germany, the US focused on securing German patents to boost American innovation. And it worked: access to German intellectual property after World War I greatly increased US patents organic chemistrya field in which the Germans were world leaders at the time.
A more recent example was the US-Japan trade war 1980s. Back then, many Americans saw Japan’s growing market share in semiconductors and automotive industry industries as a threat to the US economy. To address concerns about the “dumping” of these goods, American leaders pursued extremely aggressive policies against Japan.
For starters, the democratic administration of the President Jimmy Carter asked the Japanese automakers they build factories in the USA. Then the Republican administration of President Ronald Reagan was imposed 100% tariffs on $300 million worth of Japanese imports in 1987.
The two trade wars are similar. Then, as now, the US government sought to ensure America’s economic supremacy, an agenda that had strong popular support across the political spectrum, despite large net losses to American consumers and businesses. The tariffs imposed by the US in both cases violated international rules set by the General Agreement on Tariffs and Trade and his successor, the World Trade Organization. Even recent anti-China political rhetoric, warning of future military conflict in the Taiwan Strait, echoes the Japan-Bachash of the 1980s, which often returned to World War II.
But there are important differences between the two cases. Japan was entirely dependent on the US for its military defense in the 1980s. American political leaders were therefore confident that any pressure campaign—whether justified or not—would ultimately succeed. There is no such assurance with China.
China’s ability to meet US demands is also limited by its own domestic concerns. In 1990, per capita income in Japan and the US was at a similar levelwhile the per capita income of the Chinese is much less, at present 17 percent at the US level. The Chinese government has invested heavily in moving its population into the middle class and establishing itself as a world leader in high-tech sectors, which will limit its room for maneuver.
At a time of enormous political uncertainty, one thing is clear: the US administration will maintain its aggressive stance toward China, a policy that, like Japan in the 1980s, has bipartisan support. But while Japan has agreed to most of America’s demands, China may not be willing or able to oblige. Chinese and US leaders will need to recognize each other’s goals and limitations if they are to avoid huge economic losses for their people.
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This article originally appeared on Project Syndicate.
