Commentary Type

What's at Stake in Trump's Looming Trade War with China


US President Donald Trump on Thursday signed an order imposing tariffs on steel and aluminum imports. The tariffs, which will go into effect in 15 days, exempt Canada and Mexico for now, with the possibility of other states to be exempted as well. Combined with the resignation earlier this week of Gary Cohn, the president's chief economic adviser who had been seen as a check on Trump's protectionist instincts during his tenure as director of the National Economic Council, they signal that Trump is ready to make good on campaign promises of getting tough on trade—and in particular with China.

With China's accession to the World Trade Organization in 2001, the country appeared to be heading toward smooth integration into the global economy. The previous decade of reforms had pulled the country away from state intervention and toward market-economy status. Over the next 15 years, China's trade in goods grew eightfold, and it became the largest trading partner of more than 120 WTO members. Multinational firms embraced China as a location for offshore production, making it the third-largest recipient of foreign direct investment in 2016, behind only the United States and the United Kingdom.

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