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US-China relations
Opinion

China will be the clear winner if Trump declares a trade war

S. George Marano says China’s sheer economic might and global links will see it through in the event of a stand-off, leaving the US to suffer disastrous consequences

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US President-elect Donald Trump has labelled China a currency manipulator and perpetrator of unfair trade practices, and threatened retaliation including steep import tariffs. But if the posturing becomes reality, the heat is likely to be on his own administration instead. Photo: AFP
S. George Marano

As the Trump administration gets ready to take office, much has been said about unfair trade with China and the threats of a trade war.

Such posturing, if it becomes reality, would be disastrous for the US. It would mean serious profit downgrades for US companies, while the world would have to choose between business with China or politics with the US. The indirect effect of slower growth in China would also have devastating consequences on its trading partners. Finally, Beijing would be spurred into putting into overdrive its strategy for increased domestic consumption and restructuring inefficient industries.

Overall, a trade war would only speed up China’s rise to become the world’s largest economy.

Watch: What Trump’s trade war with China would look like

Any bilateral trade war would spark a serious pushback from corporate America. With decades of offshoring, the repatriation of jobs would require a generational commitment. High tariffs would see the likes of Wal-Mart losing their competitive edge and downgrading profit forecasts. Replicate this scenario for China-dependent stocks, and one can quickly see a domino effect of negative forecasts and major sell-offs. Unhappy stockholders, many of whom are extremely influential, would certainly make the Trump administration pay dearly for such posturing.

On a bigger scale, a trade war would destabilise the natural order of globalisation. Sooner or later, the world would have to decide between business with China or politics with America.
Lianyungang port, in east China’s Jiangsu province, a major outlet for the country to the Pacific Ocean. With the China-Kazakhstan logistics terminal going into operation in May 2014 and the first freight train departing to Kazakhstan’s Almaty on February 25, 2015, the port now plays a pivotal role in connecting East Asia with Central Asia and Europe, offering an attractive alternative for the flow of trade. Photo: Xinhua
Lianyungang port, in east China’s Jiangsu province, a major outlet for the country to the Pacific Ocean. With the China-Kazakhstan logistics terminal going into operation in May 2014 and the first freight train departing to Kazakhstan’s Almaty on February 25, 2015, the port now plays a pivotal role in connecting East Asia with Central Asia and Europe, offering an attractive alternative for the flow of trade. Photo: Xinhua
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