Mr. Trump finds the right war

On being merely half-wrong twice a day

Every stopped clock is right twice a day, and Donald Trump is probably right on China, methinks. Or at least half-right.

It’s an ugly situation right now for U.S. farmers, who are losing and fearing to lose sales of grains and meats to the gigantically consuming nation as the Trump-launched war’s repercussions come home. But China’s trade sins have to be dealt with some time, and so far nobody has shown a willingness to take it on.

Chinese companies often loot Western companies of their intellectual property, the Chinese government forces conditions on those trying to operate in China that would outrage the Chinese if we imposed them upon their companies operating here, controls its domestic market in ways no WTO country should be allowed to get away with, and aims to use these methods to vault over the technological superiority of Western countries and leave us as mere suppliers to their workshop. (See Made in China 2025.)

Trump’s belligerent forced renegotiation of NAFTA was stupid and destructive. It was 1) unnecessary, with neither Mexico nor Canada acting badly; 2) counterproductive, with Canadian and Mexican support for U.S. actions on a number of fronts now going to be much harder for the U.S. to gain after Trump has outraged and insulted two formerly friendly neighbours; 3) a terrible distraction, with serious problems with China being ignored while the NAFTA distraction went on and on.

The abandonment of the Trans Pacific Partnership was also an act of geopolitical idiocy, with the U.S. relinquishing a role of leadership and the ability to set the terms-of-trade for the Asia-Pacific region, an area that China is steadily bringing under its influence.

Both TPP abandonment and NAFTA renegotiation were loud promises made by Trump as he ran for office, but his bullyboy antics have caused a lot of collateral damage.

But with the NAFTA refresh agreed, he has turned to China, and that’s the right trade war. China relies upon the U.S. and other Western countries more than most believe, yet it has consistently abused them. It’s time for that to stop. There’s no way to achieve that without a bit of trade blood being spilled, and that’s what we have today. (As a cynical and selfish Canadian, who writes for readers who rely upon sales to China, I hope the war stays mostly restricted to a US-vs-China level, and our nation’s farmers can pick off sales and supplant U.S. supplies as a bit of compensation for the NAFTA brutality.)

It could cause a recession. It could cause a form of stagflation in North America, as input prices rise and supply chains become less efficient. It could cause another financial crisis, as China’s debt mountain slumps into the U.S. debt quagmire and drags us all down. But at some point China needs to start acting like it’s actually part of the WTO, in spirit as well as letter, and maybe that point is now.

 

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