The rivalry between the United States and China is here to stay. But the Trump administration is bringing the wrong tools to the contest, applying blunt trade-war tactics reminiscent of the nineteenth century instead of crafting a strategy to keep the United States the world’s economic and technological leader in the twenty-first. Defensive protectionism will not meet the China challenge; only domestic revival can do that. Restoring the United States’ global standing and revitalizing its economy will require an ambitious strategy that doesn’t rely solely on changing Chinese behavior so much as on preparing the United States to compete.
After a pause in the trade war earlier this year, the cycle of escalation has resumed. In the last several months, the White House has hiked tariffs on hundreds of billions of dollars’ worth of Chinese imports and announced sanctions on the Chinese telecommunications giant Huawei. China has retaliated with tariffs of its own and is now preparing for a protracted economic conflict.
The Trump administration is right that China’s high-tech mercantilism threatens U.S. economic competitiveness and national security. China aims to replace the United States as the global leader in several high-tech sectors. The Trump administration is also right that the United States should push back. But so far the United States has not responded with nearly enough ambition.
Tariffs were always a poor choice to change Beijing’s behavior. At best, the administration’s punitive measures will shape China’s policies at the margin, earning U.S. companies a little more access to the Chinese market and slightly reducing the trade deficit. In the meantime, however, the tariffs are hurting U.S. businesses, consumers, and farmers. They are alienating U.S. allies. And, analysts warn, they are increasing the risk of a global recession.
There’s a better solution. History offers a blueprint: the United States’ strongest response to external economic and technological challengers has always been to invest in itself. When, in 1957, the Soviet Union
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