Trump's trade war logic: Good from afar but far from good
Updated 19:27, 23-May-2019
Zoom In with Zou Yue
Editor's Note: This article is based on an interview with Yan Xuetong, dean of the Institute of International Relations at Tsinghua University, by CGTN's anchor Zou Yue. Yan is one of China's leading experts on China's foreign policy, national security, and U.S.-China relations. He has written several books, including Analysis of China's National Interests, winner of the 1998 China Book Prize, Ancient Chinese Thought, Modern Chinese Power, and Leadership and the Rise of Great Powers.
"It is the economy, stupid." the Clinton campaign strategy is brought to life again by U.S. President Donald Trump in international relations. At least that is what Yan Xuetong thinks about Trump's trade war.
"Trump chooses to confront against China in the economic domain, rather than political and security fields like his predecessors. That's why he initiated a trade war at the first place," said Yan in an interview with CGTN's Zoom In.
The 11th round of trade negotiations ended in Washington on May 11 without a deal, crashing the hope that the impasse could be ended soon. 
The U.S. accused China of "reneging" on trade commitments it "has made" in early rounds of talks, which China had firmly denied.
"We believe before we reach a deal, any changes are natural, and inevitable in the whole process," said Chinese Vice Premier Liu He, Beijing's top trade negotiator, to reporters in Washington after the talks.
Liu also outlined three main differences keeping the two sides from reaching a deal: China's call on both sides canceling all punitive tariffs, the figure for Chinese purchases of U.S. goods, and a balanced text of the agreements.
"We did not backtrack. We had disagreements over how to write some of the text is all," he said, "any country has its own dignity."
But no matter what is behind the deadlock, immediate harm has been caused. Both stocks slumped after the announcements of new tariffs. Though employment rate in America drops to 3.6 percent in March, reaching a decade low, U.S.-based employers announced 230,433 job cuts through April, up 31 percent from the same period a year ago, according to outsourcing firm Challenger Gray & Christmas.
Many experts argued the Trump's tariffs on Chinese goods are a bill paid by the American consumers.
A study by the Trade Partnership indicates the new 25 percent tariffs, combined with earlier taxes imposed on 50 billion U.S. dollars in Chinese shipments and steel and aluminum, would cut U.S. employment by 934,000 and cost the average family of four 767 U.S. dollars a year.
And if the U.S. moves ahead with 25 percent tariffs on everything China exports to the U.S., it could amount to a tax hike of more than 2,000 U.S. dollars on the average American family, according to a report by Politico.
"Both sides will do comparative studies on how much they benefit more from the other. If they can cause more damage for the other side than themselves, the trade conflicts will be continued," Yan Xuetong said.
If a deal can be reached eventually, "it means both sides face less damage or loss caused by the trade war. It doesn't mean that they will benefit from it, but just reduce further harm," Yan added.
The self-inflicting harm is generated by the priority of the Trump administration – a booming economy which includes a rise of jobs, a renaissance of manufacturing, and a reduce of trade deficit, though many economists have reiterated that the trade gap doesn't equate to money "lost" to other countries, as trade imbalances are affected by a combination of factors, such as relative growth rates of countries, the value of their currencies, and their saving and investing rates.
Last week, the U.S. added Huawei Technologies and its affiliates to the Bureau of Industry and Security Entity List, barring the Chinese telecom company from U.S. communication networks, citing national security risks. On Monday, Washington pulled off the move by 90 days, to maintain existing networks and provide software updates to existing Huawei handsets.
"The real concern is not security. It's wealth," said Yan Xuetong, "because the digital economy heavily relies on the communication technology a country processes. The most advanced communication technology will generate wealth faster than others."
"But when a country gave the priority to economic interests, that indicates the country becomes weaker," Yan added.
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