Raising tariffs is no solution to trade disputes
Note: The following article is taken from the Chinese-language "Commentaries on International Affairs".
Washington's latest threat to impose further tariffs on 550 billion U.S. dollars of goods from China has led to an increased risk of an escalation in the trade tensions between the world's two largest economies. This irrational move won't benefit the United States. Instead, it poses a significant threat to global growth, which is why Beijing has said that the best way for both sides to avoid the foreseeable risks is for Washington to abandon its plans for further levies.
In the second quarter of this year, economic growth in the United States slowed to 2.0 percent from 3.1 percent in the first quarter, evidence that the country's economy is being dragged down by the trade frictions. During this period, American farmers have suffered the devastating blow of losing one of their biggest markets, as China stopped buying American farm produce in response to the escalating pressure from Washington. More than a thousand American ranches have reportedly filed for bankruptcy.
[File Photo: IC]
The damage resulting from the trade frictions hasn't been limited to the agricultural sector. The running costs of a wide range of American businesses have been pushed higher as a result of the rise in import tariffs. As former U.S. Treasury Secretary Larry Summers pointed out in a recent interview, Washington's tactics of piling extra tariffs onto goods from China is designed to fail, and the United States has "lost trillions of dollars of projected company profits because of this effort." And Summers isn't the only one who holds a dim view of America's economic prospects: A recent Wall Street Journal report quoted a survey by the National Association for Business Economics conducted between July 14 and August 1 that found nearly three-quarters of the group's 226 members expect a downturn in the domestic economy by the end of 2021.
International institutions such as the World Bank and the International Monetary Fund have issued warnings time and again that if the trade tensions continue to escalate, the world economy will slide closer to a recession. This is why the international community has been asking Washington to stop its trade protectionism and embrace free trade and globalization.
It's time for the United States to get back onto the right track and begin a new round of negotiations on the basis of mutual respect. Only fair and rational solutions to its trade problems will benefit American business and the American people, as well as the rest of the world.