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Will Trump Start a Trade War with China?

November 25, 2016
Plain English Version
IPhones made in China.

IPhones made in China.

Donald Trump vows to bring good jobs back to America. He talks about China and Mexico. He says they are nations that took away thousands of US factory jobs.

He seems to promise a trade war. He could use tariffs to raise the cost of goods coming into the country. Trump is talking about a 45 percent tariff or tax on those goods.

That would hurt China. But a big majority of Chinese exports go to countries other than the US.

What could China do to get even? It could, for example, stop making iPhones. This would hurt Apple and American consumers. It would not hurt the Chinese economy that much. It is not clear where Apple could soon make the phones.

China could cancel its orders from Boeing. And buy planes from Airbus. Airbus is a European company. It could stop importing soybeans and maize. That would hurt farmers. It could stop the sale of rare-earth minerals. These are the minerals used in electronic devices.

What happens if making things in China gets too costly? US companies would look to build factories in other nations. They want low labor costs. That means that jobs will not come back to the US. And robots could do a lot of the jobs if they do return.

All these things are bad for American workers and families. The number of unemployed people will rise.

There is another problem, a bigger one. Global trade is the future. Countries all over the world know there is a supply chain. It brings goods from one country to another. It brings better wages and more investment in poor countries.

The US is the leader in world trade. China could replace it as the world leader. Already the Chinese are reaching out. They are asking Pacific nations to join a trade agreement with them.

US influence in world markets will diminish. The worst thing is that China will picture itself as a victim. China is part of the World Trade Organization. That agency stands for open rules-based trade. China will become the leader in pushing world trade.

One expert said countries would see their future lying with China.

A fight on trade will make Trump look defiant. He will be fighting for American workers. But it is China and other countries that will benefit.

Source: The New York Times November 22, 2016

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