Tu Xinquan: The Outlook of U.S.-China Trade Relations and Responses under Trump's Trade Policy (AI Translation)

屠新泉：特朗普贸易政策及中美经贸关系的前景与应对

The trade policies of former President Donald Trump present a complex blend of certainties and uncertainties. Trump's tendency to implement tariff increases is well-known, as he has famously dubbed himself "Tariff Man," though the strategies and objectives underlying these actions remain ambiguous. His unpredictability, compounded by the motivations behind his decisions, adds a significant layer of complexity and uncertainty to his trade policies [para. 1].

Trump's approach, particularly toward the World Trade Organization (WTO), suggests a potential continuation of efforts to undermine the multilateral trade system. During his first term, he threatened to reduce or withhold the WTO’s budget, a strategy he may pursue with renewed determination if he enters office again. This would severely impact the WTO’s functionality, as it relies heavily on operational funds and leadership. Although alternative solutions exist, they remain challenging to implement [para. 1].

Moreover, Trump intends to renegotiate numerous trade agreements, such as the United States-Mexico-Canada Agreement (USMCA), which contains clauses allowing periodic evaluations and renegotiations. Trump's dissatisfaction stems from the trade surpluses accrued by Mexico and Canada, encouraging him to pressure both countries into further concessions [para. 2]. Additionally, Trump's objective to reduce America's trade deficit may involve leveraging tariff threats against countries like Vietnam and parts of ASEAN, where Chinese industrial investments are notable. These tariffs aim to disrupt the Chinese supply chain, even though imposing them may have adverse domestic effects [para. 3].

The prospect of revoking China’s Most Favored Nation (MFN) status further intensifies trade tensions. Some U.S. Congress members have proposed canceling China's MFN status, a move weighted with symbolic implications. Although this would not instantly result in a 60% hike in tariffs, it signifies a possible economic disengagement between the two nations. Nevertheless, Trump's stance on MFN revocation is not notably firm, largely due to opposing views within U.S. interest groups concerned about reciprocal actions from China, which would affect U.S. export industries significantly [para. 4].

Analyses on the effects of U.S. tariff increases present diverse scenarios, making exact predictions difficult. It is accepted, however, that the impact will be significant, emphasizing the importance of preparation for the resultant uncertainty and volatility [para. 1].

Looking at the medium to long term, a consensus in the U.S. underscores the necessity to decouple from China, a sentiment resonating across bipartisan lines. The prevalent belief is that U.S. relations with China benefit the latter disproportionately. Unlike the historical resolution of the U.S.-Japan trade war, reconciliation seems unlikely due to differing stances on national security and industrial priorities [para. 5].

In response to current trade issues, China should consider several strategies: adjusting export tax rebate rates specifically targeting the U.S., bolstering multilateral trade systems like the WTO by possibly filling financial voids left by the U.S., and promoting regional trade cooperations under its initiatives such as the Belt and Road. Additionally, China should expand its industrial chains internationally to counteract U.S. efforts of economic decoupling [para. 6].

Ultimately, the U.S.-China trade contest is a developmental race dependent on sustainable economic growth, demanding adaptability in domestic demand dynamics to continue progress effectively. Strengthening development internally and internationally remains a focal point for China's future economic strategies [para. 7].