The increasing threat of a trade war between the U.S. and China seems to loom closer each day, though President Trump seems confident America will win its trade dispute with the world’s second-largest economy.
“President Xi and I will always be friends, no matter what happens with our dispute on trade. China will take down its Trade Barriers because it is the right thing to do. Taxes will become Reciprocal & a deal will be made on Intellectual Property. Great future for both countries!” Trump said in a tweet on Sunday.
China and the U.S. have been inching toward a trade war by announcing proposed tariffs in a tit-for-tat fashion. Trump last Thursday said he would ask U.S. Trade Representative Robert Lighthizer to consider an additional $100 billion in tariffs on Chinese exports to the U.S., the latest move in the dispute with China.
Earlier that week, the Trump administration published a list of imported Chinese products that could face additional tariffs, which it said were part of America’s response to the country’s “unfair trade practices related to the forced transfer of U.S. technology and intellectual property.” In a swift response, China announced it would implement tariffs on $50 billion worth of U.S. goods, including soybeans, autos and aircraft.
Despite this, U.S. Treasury Secretary Steven Mnuchin said Sunday he doesn’t expect the U.S. to enter a trade war with the Asian country, which is the largest purchaser of American soybeans and a critical market for Chicago-based airplane maker Boeing.
"Our expectation is that we don't think there will be a trade war; our objective is to continue to have discussions with China ... I don't expect there will be a trade war – it could be, but I don't expect it at all," he told CBS' “Face The Nation.”
Still, some experts say the issue has turned more political than just pure economics.
“Xi Jinping, the Chinese ruler, has accumulated absolutely power – or close to absolute power. That means he becomes responsible for everything,” Gordon Chang, author of “The Coming Collapse of China,” told Maria Bartiromo on Sunday. “If you have a problem in a trade with the United States, he knows that he’s got to intimidate us, so he’s going to use all of his power and authority to go after us, so this could get ugly.”
Trump pledged in early March to take action against China for its alleged theft of intellectual property from tech firms in Silicon Valley. Though China is able to access the U.S. tech sector, the country is cutting off their own, Chang said, noting the issue was likely more important than trade itself.
“This is where the competition for China and the United States is going to be played out,” he said. “Yeah, trade is important, but it’s going to be who owns 5G, quantum computing, quantum communications and artificial intelligence.”