Time is on China's side. The US can throw a tantrum all they want.
They should play a long game. There is no benefit for them in retaliating to hurt the US as long as it does not cause issues in domestic politics. They should focus on not getting hurt too much and let time do the rest.
The US would need to implement tarrifs of several hundred percent to make a difference. A 20% tariff China can just make a small change to the price of their currency and ride it out. An article today has a quote from Jack Ma that he thinks this trade war will last 20 years.
China has deliberately manipulated the yuan for decades now. I first studied and modeled the manipulation while an undergrad in economics 15 years ago. It has helped them remain an export-driven economy, for good and bad. It's not a good move at this point in time. China needs desperately to increase domestic consumption. Manipulating the Yuan further will only lead to more wealth flight out of the country as citizens try to protect their wealth from devaluation.
It can't last that long. Eventually the disputes will reach a WTO tribunal, at which point both sides will either need to acquiesce, or risk going it alone outside the WTO system, or perhaps destroy the WTO altogether.
U.S. conservatives love bilateral trade deals, but that's only because most trade occurs through the WTO system, making bilateral negotiations tractable. If either the U.S. or China lost the benefit of the WTO system, they would be indisputably worse off. So would everybody else. But in any event the end game will be resolved, for better or worse, long before 20 years is up. If there's still a dispute raging in 20 years then the next 20 years will be filled with economic and political strife much like those of the 20th century.
> It can't last that long. Eventually the disputes will reach a WTO tribunal, at which point both sides will either need to acquiesce, or risk going it alone outside the WTO system, or perhaps destroy the WTO altogether.
It probably can last that long. It will take years for a WTO tribunal to do its work, and even after the tribunal makes its ruling, there can be years more of foot-dragging. I can see all of that taking at least a decade.
What Trump wants is "a win", which is an extremely subjective assessment on his part and doesn't even necessarily require any material change in position. Everything else is a means to that end, including the endless posturing and 1980s Wall Street-style hardball tactics.
Every president has declared the ICJ irrelevant. The Pentagon would send tanks to the White House if a President so much as hinted at accepting ICJ jurisdiction. And in any event, the U.S. doesn't dispute the usefulness of the ICJ or its jurisdiction over other countries, it just disputes the usefulness of the U.S. being subject to ICJ jurisdiction.
By contrast, the WTO deeply matters to the wealth and security of the U.S. economy. But much like NATO, Congress is willing to call Trump's bluff.
> Every president has declared the ICJ irrelevant. The Pentagon would send tanks to the White House if a President so much as hinted at accepting ICJ jurisdiction.
Are you seriously claiming there would be a military coup in the US over something like that? The US has very strong taboos against military intervention in politics, much stronger than exist in many other countries. That you would make such a claim calls into question much that you've said about the US.
I made a hyperbolic statement to emphasis that it's not politically viable. No, I don't think there'd be a coup. But I also think acceptance of ICC jurisdiction in the near future is about as likely as there being a coup. The military institutionally--the people that embody the military at the Pentagon, in Congress, in the White House, and elsewhere--would never allow it even if a majority of Americans were okay with it.
ICJ (which I confused with the ICC earlier) is a little different because technically the U.S. has a veto as a member of the security council. Nonetheless, we only submit to ICJ jurisdiction on a case-by-case basis; which is to say, when we know we'll win or when we don't care one way or the other.
I hesitate to say its unfair because I don't know how to even begin to define what fair would look like.
Look at the situation in Syria. When Obama refused significant interventions (despite his famous "red line"), Europe sharply criticized the U.S. notwithstanding the fact that Europe refused to intervene itself. This example shows how much of the world accepts and affirms the U.S. role as a so-called global policeman, at least when it suits them.
Now imagine a situation where the U.S. bowed to pressure and intervened at Europe's behest, but subsequently was drawn into an ICC prosecution for some action in that country. That hardly seems fair, to assume both the direct cost of the conflict plus the cost of ex post criticisms by parties unwilling to participate themselves. Especially in light of the fact that, relatively speaking, the U.S. has well functioning military courts willing and capable of punishing crimes, particularly the types of serious crimes the ICC was established to handle.
The existing situation is unfair in the sense that the U.S. is a wealthy hegemon, while most countries are poor and vulnerable. But the U.S. putting itself under ICC jurisdiction wouldn't substantially change that. It's such a complex situation I find it hard to criticize the U.S. here. I sort of like Clinton's approach of "plausible ratification", which appreciated both the real politick and idealist aspects. It lent the court legitimacy without risking a crisis where the U.S. repudiated jurisdiction or where the threat of repudiation caused ICC prosecutors or judges to pull their punches. Situations of the latter type would slowly erode the ICC's legitimacy.
> Every president has declared the ICJ irrelevant. The Pentagon would send tanks to the White House if a President so much as hinted at accepting ICJ jurisdiction.
Uhm...as far as 'even hinting' goes President Clinton did sign on to The Rome Statute of the International Criminal Court without any tanks being rolled out.
Signing and accepting jurisdiction are two different things. Clinton's contemporaneous statement (from Wikipedia):
The United States should have the chance to observe and
assess the functioning of the court, over time, before
choosing to become subject to its jurisdiction. Given these
concerns, I will not, and do not recommend that my
successor, submit the treaty to the Senate for advice and
consent until our fundamental concerns are satisfied.
Nonetheless, signature is the right action to take at this
point. I believe that a properly constituted and structured
International Criminal Court would make a profound
contribution in deterring egregious human rights abuses
worldwide, and that signature increases the chances for
productive discussions with other governments to advance
these goals in the months and years ahead.
Clinton thought that being a signatory with contingent intent would lend the ICC legitimacy even if the U.S. would never submit itself to its jurisdiction, and even if it was obvious to everybody it wouldn't submit itself to its jurisdiction. It's like the opposite of plausible deniability--plausible ratification. According to his logic, the fiction mattered. To others it was pointless.
I would argue time is (and always has been) on US's side. US has the more powerful economy, and the consumer market that China desperately needs to keep afloat. In addition, time will allow US companies to move its supply lines out of China without triggering volatility in its stock prices.
China is approx. the same size as the USA but with 4 times the population.
The US have the more powerful economy today. But given the above, once China is on a development path then it is simply inevitable that it will overtake the US.
When I say 'time' I'm not looking at the next quarter or next year. That's shortsighted.
I'm looking at 20, 50, 100 years.
In fact, I would argue that the US government knows that and that's why they are increasingly alarmed.
Not only that: the trade dispute is also consequence of the rising vulnerability of the US in the capital markets.
Once it is discarded as the "one and only option", once real alternatives emerge, once the US loses its dominance, the US could end up being subjected to the same financial constraints that all countries are used to operate in.
That has the powers that be trying to delay the inevitable.
I haven't fully through this through, but at a naive level it seems to me like the U.S. has the upper hand. Less trade between the two countries means U.S. consumers pay higher prices on non-essential items. But the impact on the Chinese is much more significant: people will lose jobs.
Thinking it through: The vast majority of goods imported from China are sold to US consumers by American companies, employing Americans. A 25% increase in cost of goods sold for these companies requires severe cost cutting, leading to the lay-offs of those American employees.
They should play a long game. There is no benefit for them in retaliating to hurt the US as long as it does not cause issues in domestic politics. They should focus on not getting hurt too much and let time do the rest.