The US’s trade war fallacy

A general economic lull in the United States existed before the last election, which helped give Trump the support base he needed to win the presidency. However, the tariffs may affect parts of this support base as the extra costs to consumers are felt.

China owes its faster than expected rise as an industrial power to the transfer of jobs, capital, technology, and business knowhow from the United States.

The brands grab

Like Japan and Germany after WWII, China learned how to develop its economy through gathering technology and buying up well known established companies and brands around the world including Iconic brands like General Electric (appliances), Hoover, Motorola, MG, Pirelli, Sunseeker, Rotary, Superdrug, Ingram Micro, Wiko, Dirt Devil, Miss Sixty, Sandro, Tommee Tippee and Vax. China then went on to create its own companies, technologies and brands including Huawei, Oppo, Alibaba, Haier, Xiaomi, Geely, and Chery. The number of Chinese companies today on the 2019 Fortune Global 500 list equals those of the US. Chinese companies now have their own global brands which are challenging traditional company and brand leaders.

Branding is not just restricted to corporations. China launched the Asian Infrastructure Investment Bank (AIIB), that operates within the same domain of the World Bank and Asian Development Bank. More than 100 countries have applied for membership in AIIB, although boycotted by the United States.

Perhaps China's most ambitious brand encapsulating what General Secretary Xi Jinping calls the Chinese dream to recreate the ancient Silk Road trade routes into a logistical trade and supply chain is the Belt and Road Initiative. The prime intent behind the project is to create a global trade and supply network that will enhance relationships with other countries and regions. Theoretically this would reduce the dominance of the United States in trade relationships, tipping influence more towards China.

After Obama's Asian Pivot, Trump's meandering Asian foreign policy is a bonus for China, especially with Trump early in his Presidency abandoning the Trans-Pacific Partnership. However, China has faced setbacks with logistical problems in rolling out the BRI over so many countries at once. Many media outlets have put out disinformation and highlighted Chinese mishaps in BRI development and rollouts.

The real problem

The problem isn't China. Trump didn't cause it either. He inherited the problem from successive presidential administrations. The problem was caused by the corporations which abandoned US production, and workers who were also their customers, lured by the promise of lower costs, higher profits and entry into the Chinese market.

Trump was elected to save and create jobs. To his constituency, 'make America great again' is about reacquiring traditional manufacturing jobs. However, corporations are blocked from returning from manufacturing offshore because of the high profits they are making and higher production costs they would incur if the company returned to US production. The levels of profits the corporations now enjoy can't be made manufacturing in the United States.

Bringing back the corporations

Trump recently called on US corporations to leave China. He does have executive powers to force them, but this would be politically untenable. Working through a multi-layered constitutional democracy such as the United States would almost be impossible to garner strong and committed bi-partisan support to bring the corporations back.