With no long-term strategy whatsoever and no inkling of what it really wants except to "win," the Trump administration has purposely triggered a trade war with China that will engulf the entire world.
This article originally appeared in The Business Times.
Trump will launch his crazy "World War Trade" starting with China at 12:01 a.m. EST, July 6 barring any last minute change of heart from Washington, an improbable likelihood given Trump's and his team's penchant for never apologizing.
More than $34 billion worth of Chinese products will immediately be hit by the new taxes. China will, as it has said time and again, immediately retaliate. Trump has vowed to retaliate against China's retaliation. Needless to say but China promised to retaliate against Trump's retaliation against the retaliation.
In real-world terms, Trump will increase the taxes on $16 billion worth of Chinese goods in two weeks. Should China counter this move, U.S. tariffs will be imposed on $450 billion worth of Chinese goods.
The convoluted logic of a trade war starkly illustrates why this obsolete 19th-century practice of mercantilist economies is no longer a tool in the globalized world, that is, until Trump and his zero-sum game showed-up.
"At the moment, I don't see how this ends," said Edward Alden, a senior fellow at the Council on Foreign Relations. "This is very much in the president's hands because he's got advisers that seem divided, some substantively, some tactically. I just don't think we've had any clear signs of the resolution he wants."
After China comes the European Union (EU) and the rest of America's largest trading partners, all in the name of alleged "fair and free trade," a phrase Trump hasn't bothered to define.
"World War Trade" is seeing Trump impose tariffs on imported steel, aluminum, solar panels and washing machines from the EU, Canada, Mexico, India and Japan. But the tariffs on China will turn a trade war against friends into a worldwide trade war from which no country will be safe given globalization. Together, the countries attacked by Trumpian mercantilism will retaliate against American exports worth $75 billion by the end of the week.
And Trump continues to deny his protectionism will hurt the wallets of American workers, whom he purports to support, and American businesses.
"The people it (Trump's tariffs) helps most of all are my competitors in Germany and Japan, who also have large parts of their supply chain in Asia but don't have these tariffs," said Austin Ramirez, CEO of Husco International, a Wisconsin-based firm specializing in high performance hydraulic and electro-mechanical components it supplies to large American carmakers such as Ford.
Ramirez said his company can't absorb the additional costs arising from the 25 percent tariff increase on a variety of parts imported from China. The only solution will be to raise the prices of their products.
China says Trump's tariffs will ultimately hurt the average American and American business.
"If the United States starts imposing additional tariffs, it will actually be charging taxes on firms both in China and around the world, as well as American companies," said China's Ministry of Commerce. "To put it simply, the United States is firing at the whole world. It is also firing at itself."