The losers when the US-China trade war breaks out

The White House on April 2 criticized China for "harming US national security and distorting global markets" by raising import tariffs of 15-25% on 128 US products. This is considered Beijing's retaliation after President Donald Trump on March 23 imposed tariffs of 10% on aluminum and 25% on imported steel, mainly from China.

Derek Scissors, a scholar at the American Enterprise Institute, said that the current situation is just a "tit-for-tat" fight between the US and China, because the US's $50 billion tax package and China's $3 billion in retaliation are not much compared to the trillion-dollar economies of each country.

However, the danger is what happens next, as the two countries continue to trade blows and lead toan all-out trade war between the world's two largest economies, tpigNYDailyNews.

America First

"Trade wars are good and easy to win," President Trump, who has never started a trade war, wrote on Twitter before signing the order to impose tariffs on Chinese imports.

This is Trump's drastic action to fulfill his election promise to implement the "America First" economic policy. During his campaign, Trump accused China of stealing intellectual property and manipulating its currency, claiming that China was the culprit causing factories in the US to close, workers to lose income and jobs.

President Trump has promised tariffs on China as the first step in narrowing the huge trade deficit between the two countries. Many experts believe that China is increasingly dependent on the US market, with nearly 89% of Beijing’s 2017 goods trade surplus coming from that market.

According to them, the US economy is much larger than China's. In 2017, the value of the US economy was nearly $7 trillion higher than its rival, and the US economy's growth was also stronger while China's economic growth was slowing.

While American economists are confident in the country's victory in the trade war with its rival, a similar feeling has pervaded Chinese public opinion in recent days.

Global Times, a supplement of the People's Daily, the mouthpiece of the Chinese Communist Party, argues that Chinese society is more united than the US in the face of the threat of a trade war, giving them a better chance of winning.

"Most Chinese people will support any countermeasures taken by the government, as they know it is necessary to protect their interests. The US is divided over this issue, and the opposition will rise as the US suffers more damage from the trade war," the Global Times editorial said.

Many former Chinese officials and internet users have even called on the government to impose even heavier tariffs on US goods, saying the $3 billion tariff package is "nothing" compared to the $60 billion package proposed by Trump.

Commentator Isabella Beham ofValueWalkDespite its nationalistic tone, the Global Times article has hit a weak point in current American politics. Since his election, President Trump has done little to bridge the deepening political divide in the US.

Consequence

The US-China trade war has not yet broken out, but the American people have already suffered the first consequences. Americans are used to using cheap goods from China, so increasing tariffs on these goods will significantly increase the cost of living in the US.

“If tariffs on Chinese textiles increase, the cost of living in the US will increase, the Federal Reserve will therefore raise interest rates, slowing the economy and creating unemployment,” explained Joseph Stiglitz, an economist at Columbia University.

American farmers have also been hit hard by the trade dispute. In Marathon County, Wisconsin, for example, 140 ginseng-growing families will be hit hard by China’s retaliation. Eighty-five percent of the county’s $30 million ginseng crop is exported to China. Last September, Marathon County hosted an international ginseng festival that attracted visitors from mainland China and Taiwan.

With China imposing a new 15 percent tariff on ginseng, many Marathon County residents will be in for a big blow. “This is a livelihood for a lot of people. We’re still hoping that the tariff will be lifted,” said Jackie Fett, president of the Wisconsin Ginseng Council.

If tensions escalate, China could continue to target more vulnerable US targets, including soybean farmers, who shipped $12.4 billion worth of products to China last year.

Brent Bible, a soybean and corn grower in Lafayette, Indiana, appeared on television and urged the Trump administration to avoid a trade war with China. “We’re the ones caught in the crossfire,” he said.

In that situation, the ability of the American people to unite behind President Trump's efforts will be a big question, when they have to trade off with their living expenses and essential livelihood needs, Beham commented.