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US-China trade war
CommentUnited States

US-China trade war could end with a ‘big deal’ through baby steps towards mutual understanding

Robert Lawrence Kuhn says the US must accept China’s need to support technological development, while China should work with US policymakers who oppose tariffs but want the country to further open its markets and protect intellectual property rights

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Illustration: Craig Stephens
Robert Lawrence Kuhn
The first step in ending the US-China trade war is for each side to grasp thoroughly the other side’s arguments and ways of thinking as well as its positions and lists of demands.
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From China’s perspective, why did Trump start the trade war? Was it just the trade deficit or were there deeper reasons, like thwarting China’s rise?
Usually when there’s a dispute, there’s disputation about which side started it. This time, there’s no debate. China said it would not fire the first shot, accusing the US of starting “the biggest trade war in economic history”. (Some, however, say China started the trade war years ago, and that the US is only now, finally, starting to fight back.)

Let me offer some critical balance and call out misunderstandings on both sides. Regarding US confusions, for Trump, the conflict has always been about US trade deficits with China, about US$375 billion in 2017. But a country’s exports and imports are not like, say, a real estate company’s revenues and expenses. Trade balances are complex. Some Chinese products are produced by foreign-owned companies in China, including American companies, which capture profits from goods counted as Chinese exports.

The trade deficit includes the cost of intermediary products, like displays and chips for iPhones, which are produced in other countries; the Chinese assembly cost constitutes only a small fraction of the full cost attributable to the trade deficit.

Watch: The origins and impact of the US-China trade war

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