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What are the views on the US - China trade war? Show more Show less
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Donald Trump's protectionist economic policies led to the introduction of tariffs on $550 billion worth of imports from China. President Xi Jinping responded with tariffs of his own, affecting some $185 billion worth of US-made products. As the two global economic behemoths enter a trade war, what are the implications for both economies and the rest of the world?

The trade war is bad for the United States Show more Show less

The United States should pick its fights better; the trade war with China will harm United States consumers and businesses by causing exporters to lose business and U.S. consumers to pay higher prices.
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China can cause more damage to the United States

China can cause more damage to the United States by selling U.S. treasuries. Also, China can outlast the United States because its economy and political system can survive the damage. A trade war that the U.S. cannot win is harmful for the national economy.

The Argument

The United States cannot win the trade war because China can cause more damage to the United States. China is a huge holder and purchaser of American debt. If China begins to sell or stops buying U.S. treasuries, their value will fall, and America’s ability to raise money to fund itself will be weakened. As a result, there would be a surge in interest rates; this would cause substantial damage to the U.S. economy.[1] If America continued to escalate the trade war, they would be very vulnerable to retaliation outside of tariffs. China also has significant advantages for outlasting the United States in the trade war. Whilst its GDP is smaller, its current growth is much faster and so can absorb a bigger shock. China also has less need to worry about the political ramifications of job losses and price rises due to the strong power of the central government. The threat of retaliation outside of tariffs and the unsustainability of the trade war for the United States means that it cannot keep up the war for long enough to cause a change in China’s behavior. Despite the potential benefits of winning a trade war with China, the United States cannot risk having its economy and political agenda damaged by a more withstanding country.

Counter arguments

Any devaluation of U.S. debt would be extremely damaging for China. This would further hurt their economy in addition to the damage that the tariffs caused. Also, China cannot outlast the United States because it will fear the United States permanently reducing its reliance on China for manufacturing. China will want to end the trade war before the damage to its economy becomes permanent.

Proponents

Premises

[P1] China can cause more damage to the United States by selling U.S. treasuries. [P2] China can outlast the United States. [P3] The trade war is bad for the United States because it cannot win.

Rejecting the premises

[Rejecting P1] Any devaluation of U.S. debt would be extremely damaging for China. [Rejecting P2] China cannot outlast the United States because it will fear the United States permanently reducing its reliance on China for manufacturing. [Rejecting P3] The United States can win the trade war.

References

  1. https://www.cnbc.com/2019/05/13/chinas-self-destructive-nuclear-option-in-trade-war-selling-us-treasury-bonds.html
This page was last edited on Friday, 12 Jun 2020 at 23:58 UTC

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