The US and China Trade War

Drawing back from a dangerous situation.

The United States, the world’s No. 1 economic superpower, has imposed tariffs on China, the world’s second-largest economic superpower. China has opposed the tariffs, and both countries have turned blatantly hostile toward each other, breaking into a full-blown trade war. The U.S. and China’s collective gross domestic product is 40 percent of the world’s total. When both countries that should be leaders in developing the world’s economy face each other with self-protectionist trade policies, then it is a dangerous situation, because neither country will budge an inch.

An impact study is needed in Japan as well. The U.S. is already imposing steel and aluminum tariffs on countries in the European Union and in Canada. Additionally, increased tariffs on automobiles and automobile parts are being considered. With large-scale employment in the automobile manufacturing and production fields, imposition of tariffs there would be on a different level than those imposed on steel and aluminum. A chain of retribution is starting to spread among the countries involved. There are fears that these U.S. tariffs will encourage these kinds of actions elsewhere and that the world’s economy will be further cast into disarray.

Because the international community believes that blocking the economy with self-protectionism invites war, it has consistently promoted free trade in the postwar society. However, that foundation is being greatly shaken. It is a situation that should be exceedingly concerning.

I cannot help but say that there is slim hope in the present situation, but efforts to draw back from this dangerous situation must not be abandoned. I would like both countries, the U.S. and China, to seek compromise and lower their raised fists. The international community must also hold its ground and continue to persuade both countries to reach agreement.

At the same time, it is also necessary to quickly find a response that focuses on reality, because, although the tariffs are between the U.S. and China, other countries are involved. In Japan’s case, automobile factories are developed all over the world. The parts and raw materials supply chain and the destinations for the completed products cover a wide area. The Japanese government should examine the developing effect on the industry separately and consider necessary measures to counter the impact.

In order to influence the U.S., the international community has not only used existing principles of free trade but has also set up the framework to profit through trade agreements. It would be disadvantageous for the U.S. not to join the Trans-Pacific Partnership, the 11 countries that are aiming to enter into an agreement they can put into effect. However, President Donald Trump invoked security policy and ramped up his well-used technique of acting bilaterally, instead of reforming his actions.

It does not look like this situation will change in the future. Trump’s priority is to focus on the short term, to show the country that he stands for reducing the trade deficit and improving and creating domestic jobs before the midterm elections in November. The midterm goal would be opposing China, which is making a formidable appearance on military and economic fronts. In order to achieve these goals, Trump has chosen to use self-protectionist means such as imposing the sanction of tariffs and restrictions on investment.

As long as Trump considers the World Trade Organization unnecessary, there is a chance that the U.S. will not return to a place of international cooperation. We must not concede to the U.S., which continues to deal in ways that deviate from the rules of free trade, but the urgent issue is improving the way the WTO functions, as it has been unable to respond to the current situation.