Is a Trade War the Only Option?

An Alternative Approach to Taking On China

U.S. President Donald Trump announces a tariff on steel and aluminum imports while surrounded by workers from the steel and aluminum industries, March 8, 2018. Leah Millis / Reuters

President Donald Trump’s forays into trade war statecraft—his embrace of steel and aluminum tariffs, and his forthcoming levies on Chinese products in response to alleged intellectual property theft—are poor strategies for addressing U.S. interests. After a year of contemplating ways in which to pressure Beijing into respecting international trade rules, the president's first move barely affects China at all, since most of the United States' metal imports come not from China but from the very allies Washington needs to work with to jointly encourage liberalization in China. China is only the tenth-largest source of U.S. steel imports, accounting for just two percent of total U.S. steel imports in 2017 (a 31 percent decrease from 2011), according to the U.S. Department of Commerce. China is ranked higher as a U.S. source of aluminum (in third place), having shipped 11 percent of the five million tons that the United States imported last year. The tariffs that are tied to intellectual property will almost surely draw retaliation, and in any case push up prices for Americans, especially for lower income households most accustomed to cheaper imported goods.

Because China today seems determined to switch gears and deemphasize important elements of marketization that it had pursued in the past, Trump seems to believe there is no alternative to a trade war. In fact, there are several. First, if the advanced economies present a common defense of market principles to China, there remains a very good chance that Beijing will modify its statist lean. But given that Trump has as much vitriol for fellow advanced economies as for China, such alignment is not a reliable bet. So even if the present reappraisal must be conducted through bilateral instead of plurilateral agreements, Chinese and American leaders can and should jointly manage disengagement rather than pull apart haphazardly. Nations with non-convergent systems, meaning those that do not follow the same basic models of economic statecraft, cannot engage and interact to the same extent as

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