Walmart says US-China trade war will lead to higher prices. The news comes after the Trump administration raised tariffs last week to 25%. According to Fortune, the administration says another round of tariffs worth 25% will be implemented soon.
Presidents Bush, Obama and Trump all have long sought fundamental reforms in China’s mercantilist system, but Beijing has been unyielding. This includes high import barriers and subsidies to develop domestic production, forced technology transfers from foreign companies seeking access to Chinese markets and even state-sponsored industrial espionage.
This requires cooperation from our European allies who are similarly threatened by Chinese ambitions but have great allegiance to the WTO, other multilateral institutions and established arrangements in Europe.
Bullying them with threats of tariffs, cognitive dissonance on climate change or perhaps pulling them into a war with Iran and advocating reengaging Russia while it continues mischief in the Ukraine and the Middle East are foolish actions.
Rather, our message should be simple, clear and consistent. Make the case that admitting China to the WTO was a mistake. The international body is a club of democratic, market economies; Beijing has no intention of becoming either — so bump it out.
To these ends, the United States should limit purchases from China to the value of our sales there by auctioning import licenses equal to the value of our exports. American businesses say some Chinese products are essential to their supply chains, but most are not, and an auction system would allocate the right to import to those firms who place the highest premium on Chinese imports.
As carrots to European and Asian nations: Disavow new tariff threats, reenergize efforts to accomplish a free-trade agreement with the EU, complete the recently announced trade deal with Japan, and petition to reenter the Trans-Pacific Partnership — a free trade club that includes our NAFTA partners, Japan and several other major trading nations in Southeast Asia.
During the transition in 2018, the trade team persuaded President Trump that bilateral deals should take precedence over multilateral initiatives. That only works if China is isolationist, which it is not.
We either reengage with nations that have an interest in open trade, or China will lead them down a different path. MAGA can’t be defined in terms of America’s way or the highway — the world simply is too big for even Mr. Trump to conquer.