Trump’s confusion over the economy


Donald Trump’s protectionist policies are strongly put under question in the US. Although some people are supporting these policies, others firmly believe that Trump lacks the necessary seriousness that is the prerequisite of such big steps, and thus he’s incapable to direct these policies.

As a result, the US economy will be vulnerable in the long run. Moreover, it seems that Trump wasn’t able to achieve his economic goals in the international system up to now. The existing evidence shows this very well. Accordingly, one of the most important issues is the economic relationship between China and the United States of America.

US-China relations continue to decline during the Trump presidency. Of course, there were disagreements between Beijing and Washington over security and cyber-security issues at the time of Barack Obama, but the emergence of trade and economic disputes in their bilateral relations should be analyzed “beyond a simple controversy.” In other words, from the beginning of 2017 and Trump’s presence at the top of the political and executive equations of the United States, we have witnessed the emergence of constant crises and challenges in the relations between Washington and Beijing. Many international affairs analysts rightly believe that the conflict is not limited to economic and commercial issues, and it will also affect the political, security and regional spheres.

Evaluating the consequences and effects of Trump’s policies (in the long run) on the international economy and the domestic economy of the United States has become the concern of many experts in the field of international economics in recent months. This issue has also shown itself in the trade war between the United States and China. Although the outcome of the White House’s performance in the short term may be to increase the trade deficit of China (since with the decrease of US imports from China, Beijing’s exports to the world markets will be reduced). However, in the long run, the side effects of Trump’s protectionism can hit the domestic economy of the United States, and we’ll see a constant inflammation in the domestic and international economy of America. This will become even more apparent when the Chinese use all their economic and commercial power to confront the United States! According to evidence in the field of international trade and economics, China holds $1.17 trillion of US government debt, and China is clearly now the largest single holder of US Treasury bonds.

Since the beginning of 2017, the time of Trump’s presence in the White House, many of the experts, including many Democrats, and even traditional Republicans, warned the US government against commercial confrontation with China. Many American economists refer to China as “the US banker.” In such a situation, the full-fledged economic war between the new US administration and Beijing could be interpreted as a commercial and economic suicide. Without a doubt, Beijing and Washington will ultimately use methods in this economic conflict which contradicts their red lines.

However, the main question is, what are the effects of adopting protectionist policies by the United States government (especially against Beijing)? Have American companies and industries been accompanying Trump in this regard? In order to answer this question, we should take some important points into consideration.

The first point is that two years have passed since Trump’s presence at the White House. However, evidence suggests that the US President wasn’t successful in achieving his goals in this trade war with China. China’s monthly trade surplus with the United States rose to a record high of US $34.1 billion in September on the back of an escalating trade war that shows little sign of cooling. The figure, released by the customs administration, represented a 10 percent increase from the US$31.05 billion surplus booked for August, suggesting Washington’s tariffs on imports of Chinese products have yet to have the desired effect of narrowing the trade gap between the two countries.

These figures indicate that the Chinese can strongly resist Trump’s economic tricks. It also shows that Trump’s efforts to persuade American investors to cut off their ties with China were not effective.

“The big picture is the Chinese exports have so far held up well in the face of escalating trade tensions and cooling global growth, most likely thanks to the competitiveness boost provided by a weaker renminbi,” said Julian Evans-Pritchard, senior China economist at Capital Economics.

The next point is about the multi-dimensional effects of Trump’s policies in the international system. As noted, the economic disputes between the United States and China will be extended to other areas of relations between the two countries and will even engage other international economic players, such as Russia, the European Union and members of the BRICS.

The third point, which is perhaps the most important point, is the reaction of American companies to the decisions made by the Trump government. Beijing has announced that it will reciprocate Trump’s protectionist policies and its irresponsible intervention in international trade. This has led many American companies to criticize Trump’s anti-China policies in the field of international economics, and to analyze it as a deterrent policy. More importantly, in addition to economic tensions that are exponentially increasing, the United States is targeting China in eastern Asia by taking specific positions towards Taiwan and North Korea, an issue that Beijing will definitely react to it with a determined response.

First published in our partner MNA


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