Experts: We are all little bits of China – No one wins in a trade war

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Stocks in the US have slumped during late trading on Friday, with the cascading losses wiping out almost 1 trillion US dollars from the global equity market since US President Donald Trump announced tariffs on up to 60 billion US dollars worth of imports from China. Analysts assess the impacts of a possible trade war.

In an interview with the Financial Times, economist Timothy Taylor stated that there would be no winner in any kind of conflict and Americans will not benefit from limited trade.

Quoting Adam Smith, Taylor pointed out that what makes a country rich is value and people being able to consume things as they want. A lot of them come from the imported goods. “In fact, we could even say that the only reason we export is to get the imports that we need.”

Timothy Taylor, US economist and the author of “The Instant Economist”, in an interview with the Financial Times /FT Video Capture

In Taylor’s opinion, a trade war will only be a lose-lose game. “The question is who take the most losses and eventually gives up. At this stage, the people in the financial industry would be hurt the most. If the issue escalates, we will expect that shipment and services could also be affected. ”

And if the industry is affected, it is the poor in America that will suffer. “Buying cheap T-shirts is a basic human right,” as Taylor asserted, “and people with low-income do benefit a lot from the low-priced Chinese goods.”

He also argues that even though local companies could earn higher profits with limited trade, those benefits mainly goes to executives and investors, not so much to ordinary workers and consumers.

Martin Wansleben, the Chief Executive of the German Chamber of Commerce and Industry, shares his view on Trump’s new tariff’s plan on Morgenmagazin on ARD. /ARD Video Capture

DIHK Chief Executive Martin Wansleben has warned the US in the dispute over tariffs against "the game with fire" in an interview with Morgenmagazin. “What Mr. Trump is doing is endangering a system of treaties that we rely on. He has been acting like a bully and that’s destabilizing the global system."

Wansleben explained that if China gets into trouble, it will also affect Germany, the rest of Europe and the entire world. “We’re all a little bit of China ourselves, because we’re clients and suppliers of China.”

In the meantime, he finds it unlikely that the US could win in this war it has started: “The Chinese also own most of the US debt, so in a way, they have a grip on the dollar. How Mr. Trump thinks that will work out is completely incomprehensible to me.”

When asked whether Trump’s punitive measure is actually right since China is not “playing fair,” he argues that in fact all nations and regions are acting in their own interests; the question is how we deal with this.

“The Europeans are putting the emphasis on dialogue, with regards to China, and not on the power of the strongest. We depend greatly on open borders and a peaceful constellation.” But this system is at stake right now and he finds it interesting that such a threat is coming from the US and not from China.