U.S.-China Trade War is More About Geopolitical Rivalry, Such as in the South China Sea, Than Soybeans
As Chinese and American trade negotiators meet in Washington to try to forge an accord on trade, observers are largely focused on the countries’ economic disagreements, such as over China’s subsidies to its state-owned enterprises. But to think that an agreement on trade will protect the world from a Sino-American cold war would be as premature as it would be naive.
Of course, a trade deal is highly desirable. The collapse of trade talks would trigger a new round of tariff hikes from 10 percent to 25 percent on $200 billion of Chinese goods exported to the United States, driving down global equity prices and spurring businesses to move more of their activities out of China. Amid tit-for-tat tariffs, bilateral trade would plummet, and the unravelling of the US-China economic relationship would accelerate, creating widespread uncertainty and higher costs.