Why No US/India Trade War?

Tyler Cowen has a new Bloomberg post on the recent truce in the US/China trade war.  Here is a rare example of where I strongly disagree with him:

Nonetheless, it’s not quite fair to describe the trade war with China as a problem that Trump started and then pretended to solve. The reality is that hostility toward Chinese trade practices has been building for some time. Anti-China measures have long commanded bipartisan support not only in Washington but also among corporate leaders, who see themselves as victims of unfair Chinese trade practices and espionage. This is an issue that predates Trump, and he deserves some credit for doing something to help solve it.

Everything in that paragraph is completely correct–except the last portion of the final sentence, which is wrong. Tyler’s right that Democrats and Republicans and corporate executives have been complaining about China for years. For instance, Chuck Schumer used to constantly complain about China’s huge current account surpluses. He demanded a sharp revaluation in the Chinese yuan. China did exactly what he requested, sharply revaluing the yuan upward and reducing China’s current account surplus to near zero. But as with any schoolyard bully, capitulation of the victim just whets the appetite for more bullying. Schumer is not at all satisfied.

China needs to know that if they give in to US demands once again, we’ll just find new topics to complain about. The US is a bully—that’s what we do. We bully small countries any time they don’t agree with our foreign policy, on anything from Iran sanctions to breast milk. (Yes, China also bullies small countries on issues such as the disputed islands in the South China Sea.)

I read the situation very differently from Tyler. Previous presidents like Clinton, Bush and Obama occasionally complained about Chinese trade practices, but their economic advisors were not foolish demagogues like Peter Navarro, they were serious people who correctly advised them that China’s policies were not a big problem for the US and that we’d be better off with a policy of engagement. As a result, these presidents wisely ignored the calls for a trade war with China.

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Gary Anderson 4 months ago Contributor's comment

I appreciate your stand against US bullying of China coming from both parties. It makes no sense. We have 4.5 million customers in Asia that no longer trust us even if a semblance of a trade deal is reached. China helped bail us out of the Great Recession. We are quite unappreciative.