An insightful perspective on the trade wars

Professor Tu Xinquan of the University of International Business Economics recently presented an insightful perspective on the trade wars from China’s standpoint.  He began by reviewing the Trump Administration’s recent trade actions, particularly its use of import tariffs targeting all trading partners and China in particular, noting that it is difficult to understand the motivations behind these moves unless the ultimate purposes are to repatriate value chains to the US, and make China more like the US.  He then outlined Chinese responses to these moves, particularly its own retaliatory tariffs, but also noted that China needs to deepen its own reform efforts which is in its own interests, and that by doing so perhaps some of the heat may be taken out of the current impasse between the US and China.

Professor Pomfret took up the issue of global value chains and how they are organized, arguing that the Trump Administration’s trade strategy runs counter to the evolution of cross-border business in recent decades and, as such, is counter-productive. He also argued that US domestic political economy, notably the robust interchange amongst many lobby groups with a stake in the trade debate, will limit the damage from the trade wars.

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