Donald Trump’s trade war with China has not done the US any favours so far

In a previous article, I hypothesised that if a US-China trade war were to happen, China would come out of it much better than the United States. My argument was based on economic and social factors that gave China an advantage over the US. What has unfolded since has been tariffs on key Chinese and US exports in a tit-for-tat encounter. Overall, the US as the instigator was on the offensive and all China had to do was resist. And it did, which meant this endeavour has been a big loss for the US. 

Fast forward 17 months and there are many events now plaguing the unstable US administration. These include key personnel in the administration either departing or being censured in addition to the many political and personal witch-hunts. In China, the backlash against the ban on US shipments of vital components to ZTE from American suppliers has seen much of the public standing firmly behind Beijing. Coincidentally, ZTE, has now been offered assistance by the US administration, which can be understood as a veiled mea culpa from Washington. 

The optics in this trade war are also an important indicator. The one of significance was the US trade team visiting Beijing as an indication of the balance of power. This can be interpreted as the weaker party travelling to seek a truce. Another optic to consider is China accepting some of the US demands, which is not a sign of weakness. This is fairly common in Chinese dealings where agreements are considered malleable, and is very much in line with the Confucian philosophy. Those experienced in China business know this well. 

However, this trade war is not over yet, and one can expect the next flare-up to be greater in intensity. In the meantime, the US is more than likely to go back and revise its trade war plans while the Chinese analyse and insulate their weaknesses. North Korea, Syria, Iran and domestic pressures will all weigh heavily on a US administration that is now forced to make America great again. Overall, the signs point to a retreat by the US for now.