Economists around the world believe that Donald Trump’s strategy on China trade tariffs is bound to fail.
The strategy to smack tariffs on China in part to stop it dominating the industries of the future have been imposed with the thought that they will affect China’s ability to move up the value chain by restricting exports, but economists believe that that belief is wrong because doors to other countries are still open.
Trump’s tariff list targets exports of Chinese goods that are the building blocks to becoming an advanced industrial power — machinery and electronics, metals, chemicals and transportation equipment.
The US and China moved to the brink of a trade war on Friday after the Trump administration announced tariffs on $34 billion of Chinese imports to take effect in three weeks with another $16 billion still to be reviewed. It also pledged additional investment restrictions.
Beijing immediately vowed to hit back with tariffs of the “same scale and intensity” on imports from the US , and said all of China’s earlier trade commitments are now off the table, according to government statements.
The US now sees China as a strategic rival and imposing such curbs marks a concrete shift in its strategy toward containing China’s ascent in advanced industries. The Made in China 2025 plan, unveiled in 2015, aims to make China a global leader in 10 strategic industries that also includes high-end machinery, aerospace and advanced rail equipment.
By targeting China’s plan for future industries, Trump also can’t make much progress in another of his key goals: narrowing his nation’s huge trade deficit with the world’s second-biggest economy. That’s because China doesn’t export many of those goods to the US now.