OPINION: Trade war with China 2.0

President Donald Trump’s announcement of additional tariffs on imports from Canada, Mexico and China comes as no surprise as he clearly announced his intentions during and after the presidential campaign. The challenge of China to all its trading partners looms large as it has just recorded its largest ever trade surplus and clearly dominates the global market in electronic vehicles (EVs), solar panels and batteries.

To counter economic problems at home — including a collapse in the housing market, large local government debt and youth unemployment — China has focused on its manufacturing sector and exports. President Xi Jinping has also expanded China’s military capabilities and has pursued a more assertive foreign policy. The threat of conflict in the Taiwan straits and the South China Sea has increased, reminding us that Asia was once a dangerous corner of the globe where the United States was deeply engaged in three major wars in a lifetime.

There is no doubt that U.S.-China relations are at the lowest point since the normalization of relations with the People’s Republic of China in 1979. Getting it right with China will be the major challenge for the Trump administration which sees tariffs as its principal leverage to achieve both its economic and political objectives.

In his first administration, Trump imposed a series of tariffs on Chinese products designed to reduce the mounting trade deficit which hit a record of $418 billion in 2018. We were assured that China would pay for the tariffs, just like Mexico would pay for the wall. But several credible studies have clearly demonstrated that most of the additional costs were borne by consumers. China retaliated by cutting of some U.S. imports including soybeans. U.S. soybean farmers saw their main overseas market go to Argentina and Brazil. And the U.S. taxpayers had to pay some $12 billion in aid to the U.S. farmers who were the victims of this tariff war.

The U.S. has many friends and allies in the region, and many are wary of the growing economic and political prowess of their large Chinese neighbor. But many worry that we have been too distracted and preoccupied by Ukraine, Gaza and political turmoil at home to fully understand the challenges and opportunities in Asia. They largely credit the presence of the U.S. military in the region as a contributor to peace and prosperity but are increasingly concerned about the implications of deteriorating U.S.-China relations.

Some observers believe that Trump’s new tariffs are a means to achieving a “grand bargain” with Xi, which would resolve, or at least mitigate, several outstanding issues. I’m doubtful but hope I may be proven wrong.

Albuquerque resident William H. Itoh is a retired Foreign Service Officer who served as the Executive Secretary of the National Security Council and as U.S. Ambassador to Thailand. He will be speaking on “Challenges Old and New: Asia in 2025” at Oasis Albuquerque at 6:00 p.m. on February 5. For more information see or call (505) 884-4529.