Everything you need to know about the Trump administration’s trade war with China
“It’s safe to say that we can call this a trade war,” says Clark Packard, trade policy counsel at the R Street Institute, a Washington-based think tank. “Trade watchers in Washington have been reluctant to use the expression ‘trade war’ because it conjures up sort of a back-and-forth. But with everything subject to a tariff, what the Trump administration is talking about, you really do have the world’s two largest economies going back and forth.”
A trade war is a conflict that has the potential to “spiral out of control,” as Packard puts it.
But there’s not a lot of evidence to suggest that tariffs can solve those problems, Packard says. Trade deficits have more to do with broader macroeconomic conditions than trade policy, he says, and it’s also going to take a lot more than a tax hike to ensure China treats American companies fairly.
“Tariffs are really an outdated policy tool,” Packard says. “A lot of the trade deficit is driven by larger macroeconomic indicators and factors, like the value of currency and Federal Reserve monetary policy,” and resolving unfair trade requires “more than just unilateral tariffs. We need allies. We need to be bringing aggressive cases and new agreements to the World Trade Organization. It’s a whole-of-government approach to China, not just in the trade space.”