Lighthizer’s remarks came as no surprise to many given his central role in shaping the Trump administration’s tough and confrontational approach toward restricting China-made goods to the shores of the US.
Lighthizer is well aware of the heavy toll his tariffs are taking on American businesses and consumers, but he is unmoved by such collateral loss. This is because for Lighthizer and his ilk in the Trump administration, “a China policy that thinks about the geopolitical competition between the US and an economic adversary” is far more important than any effort aimed at maintaining the US-China economic and trade relations on a normal track which would bring the greatest benefit to ordinary American households.
Lighthizer may stubbornly think that his protectionist measures will win his country the best position in trade with China. However, his advice to the incoming Biden administration – such as making it harder for US companies to move overseas despite the cost to their competitiveness – is threatening to inflict even greater damage on the US economy that has already been hammered by the COVID-19 pandemic.
In addition to burdening US consumers and businesses with additional costs, US tariffs on $370 worth of Chinese products starting in July 2018 have failed to narrow China’s trade surplus with the US. Data from the General Administration of Customs showed China-US trade reached 3.65 trillion yuan over the first 11 months of 2020, up 6.9 percent year-on-year. Meanwhile, China’s trade surplus with the US totaled 2 trillion yuan, up 6.8 percent year-on-year. Even with the higher tariffs, the US trade deficit with China has hovered at pre-trade war levels.
While this shows close intertwining of the US-China trade ties, the destruction to be inflicted by the Trump administration’s “final bout of madness” against China to all parties is to be seen. The sanctions and financing restrictions pushed by the Trump administration on national security grounds against a good number of Chinese companies lately have caused turmoil and unnecessary volatility in industries and at financial markets.
With a week left for the incumbent Trump administration to come to its end, many people fear this could become the most challenging period for the bilateral relationship. Given the recent market performance, market may have already factored in the extreme moves taken by the administration during a chaotic power transition.
Still we hope that the incoming new Biden administration could send a positive signal on trade with China, displaying good faith and thoughtful moderation. If Washington maintains its harmful rhetoric toward Beijing and refuses to overhaul Lighthizer’s protectionist trade policies, it will deal with a heavy blow to the market sentiment expecting the light at the end of a long tunnel.
