Is There a US-China Future?

The US and China have been at loggerheads for quite sometime now. Differences between the two superpowers escalated with former President Trump’s rhetoric of cutting a better deal with China to ensure American businesses and workers benefitted most. In 2016, the US’ trade deficit with China stood at over $346 billion. This figure reduced to $310 billion in 2020, mostly on account of trade disruptions due to the pandemic. But between 2016 and 2020, there was much animosity expressed by either nation and a full-blown trade war ensued, affecting the global economy in its wake.

Trump vowed to impose tariffs on over $550 billion worth of Chinese imports. China, meanwhile, retaliated with tariffs on more than $185 billion worth of US imports. The short-sightedness of these actions led to large economic drawbacks for the world at large.

The pandemic has highlighted that the world economy is fragile and the many predicaments at hand call for a more collaborative approach. Horasis is of the strong belief that leaders should find common ground to resolve differences. Leaders must especially exercise restraint since their policy or decision making will yield repercussions for the entire world. Horasis is, therefore, organizing the virtual Horasis Extraordinary Meeting on the United States of America. It will bring together senior members from politics, business, media and academia to interact with the new US administration in finding inclusive solutions for the US and rest of the world.

Trade War Repercussions

Research by the Federal Reserve Bank of New York found that US companies lost at least $1.7 trillion in their stock prices due to tariffs imposed by the US on Chinese imports. It not only entailed negative effects for US firms that traded directly with China, but also for their subsidiaries by making them less profitable and competitive. This led to large job losses followed by investment cut backs from distressed businesses which, in turn, hurt the US economy. US farmers were also forced to cut wages and jobs, while raising prices of essential products that directly affected domestic consumers.

Amid this trade conflict, China was quick to lower tariffs for its other trading partners, largely shifting its reliance from the US. This ensured China’s economy was comparatively less affected.

Although these trade restrictions were directed at impacting China, its ill effects were felt by other nations too. Trump’s initial announcement of tariffs on steel and aluminium imports largely impacted US allies such as Canada, the EU, Mexico and South Korea, and to a much lesser extent, China.

Supply Chain Disruption

These unpredictable moves completely disrupted supply chains globally. Companies had to review their supply chain partners and seek alternatives to work around steep tariff hikes. Supply chain disruptions also caught pharmaceutical companies off-guard. Just when there was a surge in demand for personal protective equipment, medical distributors were unable to deliver these core essentials. 

With COVID-19 vaccines now becoming available, supply chain disruptions will present a massive risk on the fair, transparent, and timely administration of the vaccine to populations worldwide. In addition to varied risks that border closures and the like present, collaborative approaches alone can enable timely delivery of the vaccine. What must also be recognized is the fact that the virus has no geographical limitations. It is therefore critical that countries do not focus on only vaccinating their own populations, but also offer assistance towards other nations, especially those that lack the economic resources to source and administer the vaccine. In such a scenario, global leaders such as China and the US must come together to  ensure vaccine accessibility for all.

What the Future Holds

Although the US-China equation seems calm at present, the world can only hope that good sense will prevail and that there are efforts towards ushering in positive change. The effects of the trade war are in plain view; there really have been no benefits for the citizens of either country. The US and China both find themselves impacted negatively and the outcome really has proven the sheer futility of this myopic endeavor.

While complete rolling back of US imposed tariffs on China may not immediately be undertaken, there is at least relief in the fact that the Biden presidency will encourage dialogue. There is a greater likelihood of bilateral engagements taking place as opposed to a brash exchange of words that only resulted in a vicious cycle with each side attempting to upstage the other.

The US-China trade war will possibly hold negative repercussions for an entire generation and it will continue to snowball into a global crisis if leaders in both nations do not exercise restraint. The damages are not irreversible just yet and corrective measures can be assumed towards a more productive future.

Photo Caption: Under the Biden presidency, dialogue will trump rhetoric in America’s relations with China.