Here’s how a trade war with China could turn into a real war

SALT LAKE CITY — As trade tension between the United States and China thickens, international relations experts say military action is far from inevitable, yet some are calling on politicians to carefully consider the risk of an economic dispute escalating to armed conflict.

On Monday, China said it would raise tariffs on $60 billion worth of American goods in response to the Trump administration’s move to raise tariffs from 10 percent to 25 percent on $200 billion in U.S. imports from China. While Trump tweeted Tuesday that a deal with China will happen “when the time is right” and that his respect and friendship for Chinese President Xi Jinping is “unlimited,” an anchor on China’s most-watched state-run news program said Monday, “If you want to fight, we’ll fight you to the end.” The sudden barrage of commentaries about the trade war in Chinese media has “struck a note of defiant nationalism,” the Economist reported.

The question is, could continued retaliation lead to an actual war?

“It is obvious that the current U.S.-China trade war is stoking geopolitical tensions between the world’s two largest economies and chief political adversaries, as they become more confrontational over their discord on maritime issues in the South and East China seas and over Taiwan,” China affairs columnist Cary Huang wrote for the South China Morning Post.

Zachary Keck, Wohlstetter public affairs fellow at the Nonproliferation Policy Education Center, wrote for The National Interest in 2017 that many have dismissed the possibility that the U.S. would go to war with China as “outlandish,” citing strong economic ties between the countries, America’s military supremacy and the fact that a war among great powers would be widely spurned in the modern era of globalization. Keck, however, sees nuclear weapons and geography as the most compelling reasons for why military conflict between China and the U.S. is highly unlikely.

Despite these factors, Keck admits, “in recent years, many observers have woken up to the fact that a war between the United States and China is not unthinkable.”

What the trade war is about

American businesses and citizens have complained that the cost of tariffs imposed on China will be born by consumers in the U.S. However, more is potentially at stake than iPhones becoming more expensive. History suggests that trade wars can lead to violence between nations, according to Huang, who disagrees with Trump’s March tweet that says, “trade wars are good, and easy to win.”

“Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!” Trump’s tweet reads.

A quote often attributed to the 19th-century French economist, Frédéric Bastiat presents a more foreboding view: “When goods do not cross frontiers, armies will.”

According to Huang, in response to tariffs, exporting countries often devalue their currencies, or artificially cheapen their money, to offset the impact. The recent slump in the renminbi indicate China may be doing just that.

Mark Lennihan, Associated Press

An electronic screen shows the drop in the Dow Industrials, Monday, May 13, 2019, at the New York Stock Exchange. U.S. stocks moved sharply lower Monday on Wall Street and extended the market’s slide into a second week as investors seek shelter from an escalating trade war between the U.S. and China.

“The end of the first World War sparked the first worldwide currency war, starting in Weimar, Germany, in 1921, followed by France in 1925,” Huang wrote. “In the end, all the major economies scrambled to devalue their currencies.”

In 1930, President Herbert Hoover signed the Smoot-Hawley Tariff Act, which intensified the currency war by raising tariffs on more than 20,000 imported products. The act weakened the global economy, triggered retaliation from many U.S. trade partners and stoked nationalism ahead of World War II, according to Huang.

Further, an embargo on exports of iron, aviation fuel and oil to Japan, when Japan was highly reliant on those materials for its military operations, was part of what prompted an attack on Pearl Harbor.

Matt Egan wrote in an article for CNN Business that the trade war between the U.S. and China won’t last long and the two countries will reach a trade agreement before things escalate.

“The United States and China don’t just coexist,” Egan wrote. “Their massive economies are deeply intertwined in ways that make the intensifying trade war unsustainable.”

The risks, Egan suggests, are precisely what make trade policy a powerful bargaining tool.

“Optimists hope that the pain from the trade war — for both sides — will limit its duration. Many economists expect Washington and Beijing will eventually come to their senses and reach a trade agreement,” he wrote.

A rising power in China

As the United States seeks to maintain dominance in light of China’s growing power, the two countries are engaged in a battle for global influence. According to research by Graham Allison, professor of government at Harvard University, in the past 500 years, there have been 16 cases in which a rising power threatened the position of an existing power. Twelve of those cases ended in war.

He calls the dangerous dynamic that occurs when a rising power threatens to displace a ruling power, “Thucydides’s Trap,” named for the historian of classical Greece who wrote about the drivers that led Athens and Sparta to destroy each other. Allison explains how China and the U.S. fit the model in his book, “Destined for War: Can America and China Escape Thucydides’s Trap?”

” The United States under the Trump administration sees technology, I think rightfully so, at the crux of this U.S. China competition. “
Bonnie Glaser, director of the China Power Project at the Center for Strategic and International Studies

China and the United States have clashed on issues ranging from U.S. military aid to Taiwan to freedom of navigation in the South China Sea, criticism of China’s “Belt and Road” global infrastructure program and intellectual property.

“The United States under the Trump administration sees technology, I think rightfully so, at the crux of this U.S. China competition,” said Bonnie Glaser, director of the China Power Project at the Center for Strategic and International Studies, on BBC’s Analysis podcast.

Xi’s “Made in China 2025” program sets forth a goal for China to be dominant in 10 strategic technologies of the 21st century including semiconductors, self-driving vehicles, the internet plus and artificial intelligence. In an article for The National Interest, Allison wrote that China’s growing ambitions are inspiring “alarm, anxiety, and even angst” in Washington as leaders realize China is not only rising, but in many areas rivals or surpasses the United States.

With the Trump presidency, Allison has noted a fundamental shift in the way Washington sees China: from “strategic partner” to “strategic rival” or “adversary.”

“America had hoped that economic liberalization would bring China into a greater partnership with us and with the world. Instead, China has chosen economic aggression which has in turn emboldened its growing military,” Vice President Mike Pence said in a speech at the Hudson Institute last year, signaling this shift.

Steve Helber, Associated Press

In this May 9, 2019, file photo a container ship is unloaded at the Virginia International Gateway terminal in Norfolk, Va. China has announced tariff hikes on $60 billion of U.S. goods in retaliation for President Donald Trump’s escalation of a fight over technology and other trade disputes. The Finance Ministry said Monday, May 13, the penalty duties of 5 percent to 25 percent on hundreds of U.S. products including batteries, spinach and coffee take effect June 1.

Kevin Rudd, former Prime Minister of Australia and president of Asia Society Policy Institute, said on BBC’s Analysis that times when the relationship between countries is in flux are particularly dangerous because the “set of rules” by which the countries relate to each other become unclear.

“In the case of the U.S.-China releasionship, we seem to be precisely at that juncture. That’s why folks like me who have been looking at this relationship professionally for the last 35 years or so find this a particularly anxiety creating time,” Rudd said.

“Am I expecting the current conflict over tariffs to end with bombs or bullets? No,” Allison wrote.

Comment on this story

“But have we entered a period of fundamental reassessment of the challenge posed by a nation that is rivaling and even surpassing the United States in many domains? Will that reassessment lead to substantial changes in the ways in which Americans and Chinese do business — including trade, investment, supply chain management, and technology and IP sharing? Will the central geostrategic question of this era be whether these two great nations can construct a new form of great-power relations that meets the essential requirements of each without war?”

Allison says yes.

Powered by WPeMatico