Articles
President Trump has launched a trade war unlike any Americans have seen in decades. It threatens billions of dollars worth of tariffs against a wide range of goods. It could result in lost jobs and slow economic growth. And it is a risky strategy that puts the United States at a disadvantage in its strategic competition with China.
In a trade war, both sides suffer. The attacker loses access to things its economies want and need—things that their people and companies are willing to pay for. These include things like foreign oil, steel, aluminum, and consumer electronics. And the defender loses access to its own goods, including food and other essentials. This means that even though the administration claims it is winning the war, both parties are hurting and suffering from its actions.
The problem with Trump’s approach is that it does not take advantage of the best opportunity to resolve this dispute, which is to persuade key trading partners to work together as a bloc. These countries would agree to reduce their own trade with China, and in return, Trump would exempt them from new U.S. tariffs on targeted imports from China.
This is the most realistic way to achieve a solution to this trade conflict, but it will be difficult for Trump and his team to persuade negotiating partners that this approach is worth the cost of the resulting disruptions to global commerce. That’s because well-managed threats can bring foreign governments to the bargaining table, but if Trump digs in and keeps bombastically threatening tariffs, his opponents will dig their heels in instead, and that could make it hard for him to win the trade war.