The US needs the rest of the world if it wants to win the trade war with Beijing.

Both the rhetoric and actions of the Trump administration point to the possibility of a trade war between the United States and Beijing. To have a chance of winning such a war, the Trump administration needs the rest of the world on its side. This is unlikely to happen for three reasons: America’s economic leverage is insufficient; the national interests of much of the world are not aligned with such an arrangement; and the United States is at a relative disadvantage in terms of resources.

Tariff hikes are unlikely to bring China down. Today, exports account for about 20% of China’s GDP; exports to the US account for 18% of total exports, and the domestic value added of Chinese exports is about 70%. With these factors in mind, it is possible to calculate that total exports to the US account for only 2.5% of China’s GDP.

Cutting off US technology, as in the case of ZTE and Fujian Jinhua, will not break China. In the long run, it will accelerate China’s technological capture. In the short term, China can reorganize its technological resources to minimize the impact. ZTE is very dependent on US technology, but Huawei, which designs its own chips, is not. If ZTE is again limited in technology, a joint venture between the two sides can save that. Blocking Fujian Jinhua’s access to the world’s leading semiconductor material and equipment suppliers (the US) would be a blow, but China can still find alternative sources from Japan, South Korea, Europe and partly from domestic manufacturers.

Such policies are ineffective and they are also costly for the United States. In addition to the Chinese retaliation we have seen, the US tariff increase will also increase costs for middle- and lower-income households, reducing the competitiveness of US industries by increasing input prices. Blocking China’s access to US semiconductor technology will also deprive US manufacturers of the world’s largest market, essentially opening the door to competitors from other countries.

The chances of success would increase if the Trump administration could get other countries, especially developed economies, to join in. The impact of raising tariffs and other trade barriers on China would increase with the overall economic size of a “coalition,” and restricting the supply of technology could actually be effective if other countries’ technology suppliers followed suit. However, it would be difficult and time-consuming for the Trump administration to win over members of such a coalition for three reasons:

The first,The Trump administration’s main leverage in forming such a coalition is the size of the US market. But the Chinese market is now much larger for many products, from cars to groceries, and is expected to soon become the largest market for almost everything. Even with restrictions on some goods and services, most of the Chinese market is quite open, and manufacturers in developed countries have taken full advantage by exporting to and manufacturing in the country.

Foreign-invested corporations, mostly companies from developed economies that produce for the local market, account for more than 15 percent of industrial profits in China, including those from Hong Kong and Taiwan, which produce more for the export market. About a quarter of all industrial profits in China are generated by companies with non-domestic capital.

In fact, goods produced and consumed in China bring the most profits to companies from developed economies. Therefore, other countries, especially developed economies, will not easily trade the Chinese market for the US market, if that happens.

Monday,Even though there are countries that share the Trump administration's concerns about China and countries that have their own concerns that are not the same as the Trump administration's, the main problem is that the conflict is not great enough for them to risk both the economic and political aspects of going into an economic war - which does not guarantee that it will stop at economics.

A China that is completely defeated in this conflict would not be in the national interest of most countries. A world that is as much influenced by China’s risks as it is by the “America First” principle. Therefore, most countries in the world, rather than actively participating in this conflict, would rather use this context to reshape their policies toward both powers to their own best interests, while trying to maintain a balance with both sides.

Tuesday,With its Belt and Road Initiative and other similar initiatives, China has become a significant source of investment and finance for many countries around the world, and has a significant impact on their international policies. The United States does not have the resources to compete with China in this regard.

In 2017, the GDP by purchasing power parity of the US and China was 19.4 trillion USD and 23.3 trillion USD respectively; the national savings rate was 18% and 48% respectively. In terms of numbers, the amount of resources available for investment in the US and China would be about 3.5 trillion USD and 11 trillion USD. Considering the government's stronger control over the use of this money, the resources that China can use for international and domestic strategic projects are also larger than those of the US.

With the above factors, the Trump administration will not be able to win the trade war with China. But no one will feel comfortable with that. That is also the reason why US President Donald Trump will meet with Chinese President Xi Jinping on the evening of December 1, after the end of the G-20 Summit in Buenos Aires, Argentina. The result of this meeting will change the current trade war between the two countries.