Starting a trade war with China?

[stpioc]

On Monday, President Donald Trump signed a measure to begin exploring an investigation into China's theft of US intellectual property (IP). In the international business community, it's no secret that in China, there is little respect for trade secrets. 

However, the way the Trump administration is handling the issue ignores a clear warning the Chinese government gave to the US back in January. It's using Section 301 of the US Trade Act of 1974, a law that hasn't been used in decades and would allow Trump to put a tariff on Chinese goods without Congressional approval.

In an interview with Prospect.org Trump adviser Steve Bannon seemed gleeful about the grave implications of Section 301. He confirmed reports that at least some in the administration had planned to skip the exploratory process for the investigation and proceed more aggressively, but the conflict with North Korea slowed down the process.

“To me,” Bannon said, “the economic war with China is everything. And we have to be maniacally focused on that. If we continue to lose it, we're five years away, I think, ten years at the most, of hitting an inflection point from which we'll never be able to recover.””

China warning trump on trade - Business Insider

[stpioc]

In an interview with Progress.org, the White House adviser laid out a single specific goal for American "economic nationalism" in the Trump administration — a geopolitically defining conflict with China. “We’re at economic war with China,” he said. “It’s in all their literature. They’re not shy about saying what they’re doing. One of us is going to be a hegemon in 25 or 30 years and it’s gonna be them if we go down this path. On Korea, they’re just tapping us along. It’s just a sideshow.”

What Bannon is talking about is a trade war, and it would be an unmitigated disaster for both sides. Since the end of World War II, the United States has tried to build global institutions and rules for engagement that minimize conflict or at least provide the steps for preventing them. In the case of trade, it's the World Trade Organization, which China joined in 2001.

He, and others in the administration, like Trade Council head Peter Navarro, believe that China manipulated and abused the WTO in order to gain an unfair advantage over the US, especially when it comes to manufacturing. As proof, they cite the US trade deficit with China — a measure that's actually irrelevant to economic health — and have sought to undermine decades of careful diplomacy and negotiation. Bannon, you see, does not care for our institutions. He would like to see those all fall away.

"There is no winner in a trade war. We the relevant people can refrain from dealing with a problem in the 21st century with a zero-sum mentality from the 19th or the 20th century," Chinese Foreign Ministry spokesperson Hua Chunying said in a press conference on Thursday when asked about Bannon's remarks. Together, the US and China account for 40% of the entire world's GDP — but never mind that.




From 2001 to 2016 US imports from China increased 3.5 times, while US exports to China increased almost 6 times — but never mind that.

China consumes a ton of products made by Trump's base. It is the largest market for US soybeans (62% in 2016) and airplanes (25% of Boeing passenger planes in 2016). It the second largest market for US cotton (14% in 2016), auto (17% in 2016), semiconductors (15% in 2016).
But never mind them, and never mind any of that.

Steve Bannon interview advocates trade war with China - Business Insider

[stpioc]

China’s WTO entry has generated significant gains for US consumers. Our research shows that the average prices paid for manufacturing goods by US consumers were 7.6% lower between 2000 and 2006 (around 1% a year) due to China’s WTO entry. Most of these gains come from China lowering their own import tariffs, which raised Chinese firms’ productivity, exports, and varieties.

China’s WTO entry benefits US consumers | VOX, CEPR’s Policy Portal