​​America Versus China: A 522% Tariff Can Escalate, or Defuse, Conflict

Barack Obama’s trip to Asia offered the US President a chance to solidify and bolster bilateral relations with America’s Asian partners.  In asserting US interests across Asia, the Obama Administration is competing against many Chinese interests, especially when it comes to selling arms to Vietnam and Japan.  As many US and Asian interests align against China’s more aggressive pursuits of its interests, there is a necessary degree of conflict that is unavoidable.  As long as both the US and China assert their conflicting interests within the region in a way that both sets of interests are addressed, however, a serious conflict can be avoided.
 
Unfortunately, this is easier said than done.  Looking at bilateral trade between the US and China, growing fears of a trade war suggest more serious conflicts are yet to come.  A 522% antidumping tariff imposed upon cold-rolled steel serves as a bold example of a potential flash point that could spark a far more devastating conflict, especially since economic interdependence helps mitigate the possibility of an armed conflict.  On the other hand, strife is natural part of the recalibration process that must be embraced to confront misaligned public policies and national interests.

In response to the new tariffs, Chinese officials mocked the tariffs by referencing “inefficiencies” in the US steel industry that keep US prices higher and production lower.  Free trade advocates, of course, seized upon this criticism of past and present protectionism.  From their perspectives, the US steel industry is struggling to overcome deeply entrenched inefficiencies that resulted from US producers having been shielded from the realities of competition for generations.  In other words, the US steel industry should have been allowed to die, despite noneconomic national interest, when economics policies started to favor outsourcing.
 
The US steel industry does not always embraced the most efficient practices and public policies have been ineffective.  Because steel workers earn a decent Middle Class wage, the US government imposes more costly regulations onto the industry, and US companies must pay higher taxes, which are all necessities for the nation-state, US companies face higher costs.  If efficiency is solely based on cost of human resources, regulations, and taxes, the US steel industry, as well as the rest of the US economy, must be considered too inefficient to operate in a global economy.
 
That said, China has similar interests with the US, at least, when it comes to maintaining employment across the steel industry.  Thanks to government super-subsidies and favoritism from the Chinese government, i.e. the corporate board of China Corp, Chinese faces even greater efficiencies in the form of unsustainable overproduction.  The Chinese solution is to slash prices and sell globally to maintain demand in order to sustain production as well as jobs.  This is where the root of the American-Chinese conflict lies.  Frankly, the fundamental issue is not about trade; it is about jobs. 
 
The US cannot afford to embrace free trade policies that undermine the incomes of the American People.  For this reason, necessary policy recalibrations, such as the 522% traffic, are expected.  In accepting this reality, the focus can be placed on China’s economic interests.  Just as the US has relied on overconsumption to fuel the American economy, China faces a glut, because it relied on massive overproduction to sustain jobs.  Instead of pushing back against the US for asserting its own interests, China must recalibrate its internal economy to serve the needs and demands of the Chinese People. 
 
China’s economic ties with the US afford it access to a lucrative marketplace, but those same ties offer the Chinese something far more valuable, especially as the Chinese reach peak demand for their products.  The US economy is two-thirds consumer spending, which means the US has been successful in creating a market driven economy built on serving the needs of the American People.  As such, China needs a healthy, balanced relationship with the US to capitalize on the available expertise.  Moreover, greater willingness to accept the assertion of each others’ interests can help avoid a major conflict between the US and China.