Daniel McCarthy

Why Trump’s ‘trade war’ makes strategic sense

Why Trump's 'trade war' makes strategic sense
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Has Donald Trump sparked off a trade war? His plans for a 25 percent tariff on steel imports and 10 percent tariff on aluminum have shocked friend and foe alike. China is outraged; so are Canada, Japan, and South Korea—allies that in fact export more steel to the U.S. than China does. They stand to be hurt worst if they aren’t granted exemptions or cut special deals by the president. Trump accuses the Chinese of 'dumping' steel into the American market, while the legal grounds for his new tariffs rest in the idea that strategically critical manufacturing is endangered by a diminished U.S. metals industry. But if the tariffs inflict the brunt of the misery for the region’s steel producers on China’s rivals—Japan, South Korea, and Taiwan as well—the result might only be to strengthen the People’s Republic. A more productive American steel industry will come at the cost of weaker allies in East Asia. Does that make strategic sense?

It very well might. Japan and other U.S. allies have flourished in the trade environment that Washington has upheld since the end of the Cold War. But China has flourished the more, to the point of overtaking the U.S. as the world’s largest economy. If power differentials count—and they do—Washington’s way if doing business has only fed a great power rival while slowly starving America herself of hard industry.

America’s allies, and America’s own non-Trump leadership, would like to keep the game going nevertheless. Globalists of the right-wing Republican and left-wing Democratic varieties alike imagine that China aspires to nothing more than to grow and get rich. So what if that also means China grows more powerful?

Unfortunately, China’s leaders, above all Xi Jinping—now likely president-for-life—have shown much more imagination than the West’s merely money-minded liberals. China built up its manufacturing power though exports, while impeding foreign access to its domestic markets (often granting access only in exchange for technology transfers and joint-venture arrangements that gave Chinese companies access to everyone else’s R&D). The goal, for men like Xi, wasn’t just prosperity—it was prosperity in the service of the state, economic power that would fuel China’s rise as a world strategic power.

And having used liberal globalism for its own ends, China is now casting it off—adopting a more aggressive stance toward its neighbors, encroaching on their waters, and stripping away the veneer of constitutionalism at home, leaving Xi an autocrat prepared to lead his country into its next, more-than-economic, phase of expansion.

Trump’s tariffs by themselves won’t stop that. But they may mark the beginning of the end of American complacency toward the economic foundations—the industrial foundations—of world power. Non-liberal China would simply devour a liberal world order, but a world order in which America (and ultimately its allies too) cherishes its industrial strength is one that has a chance of being balanced.