On the face of it, President Trump’s supposed trade war with China looks more than a little bizarre, mainly because the trade between the two nations is so tiny.
China exports to the US account for only 3% of its GDP, while goods sold by the US to China represent less than 1% of US GDP. So even if the current tit-for tat over tariffs between the two nations were to blow up – or indeed if trade were to cease – the consequences would not be catastrophic for either.
So why is Trump blowing his trumpet quite so forcefully, prepared to risk diplomatic relations with the world’s fastest growing and most populous nation?
Or is this yet another example of the President’s paranoia, and outdated views on protectionism, which has fuelled his America First philosophy ? According to Peter Navaroo, Trump’s trade adviser at the White House, the reason that Trump is calling China to account now is because of what he fears the country will do in the future.
In a fascinating interview with National Public Radio this week, Navarro explained Trump’s position like this: “ We’re trying to basically win the battle over the emerging industries of the future. China has this manifesto called China 2025 which basically lays out a game plan to dominate virtually every emerging industry – artificial intelligence, robotics, quantum computing.”
Technology, not tariffs, are at the heart of Trump’s call to arms: “If they basically seize that high ground technologically by stealing from us, we will not have a future here as a country in terms of our economy and our national security because a lot of those industries of the future have significant military application. So what President Trump is doing correctly is standing up to China. This has been going on since 2003.”
As one of Trump’s closest advisers, Navarro should know more about what is going on inside Trump tower more than most, at least for now – or until the president changes his mind. The author of Death by China, Navarro is a well-known critic of China and Germany and has accused both countries of currency manipulation in the past. He wants to boost the US manufacturing sector and bring back supply chains.
In effect, there are two separate issues going on between the US and China, with tariffs being the front to the more serious war: technological warfare. If Navarro is right, then Trump’s aim is to stop China from stealing more US technology and intellectual property theft, practices he claims the Chinese have been doing for 17 years. Putting up tariffs going on aluminium and steel against China are the way to hit out at them, but the real dance being played is to force the Chinese to stop stealing. In return, the Chinese are hitting back at the US where it is most vulnerable – the agricultural sector, where sales of port, fruit and soybeans are so important to the working class jobs.
This second war is deadly serious: it’s worth listening to all of Navarro’s interview to hear the depth of his fury – and therefore, one can assume, Trump’s anger towards China. “ And for America, we’ve lost literally millions and millions of jobs, and trillions of dollars have been exported to China in the form of a massive trade deficit. And I think what’s interesting at this point in the U.S.-China relationship is how China is responding.”
“They deny that they steal our intellectual property. Everybody knows they do it. They deny that they’ve forced the transfer of our technology. And so this president, Donald Trump, has had the courage and the vision to say that we need to change that relationship in a way which is beneficial to America.”
Whether Trump’s bully boy approach will work is of course another matter. But it may just be the sort of language that the Chinese understand best. We shall see.