Tariffs to undermine world economic growth: former US diplomat

“I think we have dangers in these kinds of policies. The Smoot-Hawley Tariff Act, prior to the Great Depression, is considered one of the causes of the Great Depression that started in 1929. So, if we're to follow these policies of tariffs, this is gonna affect economic growth worldwide and undermine what is a pretty good global economy today.”

--Stephen Orlins, President of US National Committee on US-China Relations

Economic observers and entrepreneurs are voicing concern and hope over a looming China-US trade dispute.

China announced plans to launch an anti-dumping investigation into imports of phenol from five countries, including the US, on Monday.

Stephen Orlins, President of US National Committee on US-China Relations speaks at the China Development Forum on Mar 24, 2018. [Photo: CDF]

This comes after US President Donald Trump signed a memorandum last week which could impose tariffs on up to 60 billion US dollars’ worth of imports from China.

For more on this, CRI's Yang Guang caught up with Stephen Orlins, President of US National Committee on US-China Relations and a former diplomat, at the now-concluded China Development Forum.

Q: Chinese authorities announced to launch anti-dumping investigation on chemical raw material phenol of 5 sources including the United States, so do you think it's a sign of escalation of the trade disputes between the United States and China? Where would it go?

A: Number one, it's an investigation, there's not an imposition of tariffs, so that I think it's just, it's preparing for a possible escalation, I think there's no question, that's possible. Don't forget the announcement that President Trump made is not an imposition of tariffs yet, it is a process which is gonna take 90 days. They're first going to designate what goods are gonna be subject to tariff, then they're going to consult with the business community and the public, then they're going to try and draw conclusions, so the fastest it will happen is in 90 days. You saw today that Secretary Mnuchin, the Secretary of the Treasury of the United States, sent a letter to Liu He. So what's going on is these proposed tariffs are creating a pressure for negotiation. So I expect to see negotiations going on over the 90 days, I think in the end of 90 days, we'll see, as a former diplomat, I can tell you that deadlines are often extended.

Q: How do you evaluate the trade policies of the Trump administration to China? 

A: If there's an imposition of tariffs on 60 billion dollars of exports to the United States, we'll have to see what the percentages of the tariffs are, and then we'll see what the effect is. So far, the steel and aluminum tariffs are tiny, they really, China exports virtually no steel and aluminum to the United States, so that really hasn't had a major effect. But certainly, Trump's rhetoric is very harsh.

Q: If there was a trade war, who will be the biggest loser?

A: Well, if it escalates to hundreds of billions of dollars of goods being subject to tariffs, that would then I guess become what you're calling a trade war. I think we have dangers in these kinds of policies. The Smoot-Hawley Tariff Act, prior to the Great Depression, is considered one of the causes of the Great Depression that started in 1929. So, if we're to follow these policies of tariffs, this is gonna affect economic growth worldwide and undermine what is a pretty good global economy today.

Q: Chinese government has warned that if the trade dispute continues, it will harm, jeopardize the relations between the two countries, to what extent do you think these have already done to two countries' relationship?

A: I think so far the relationship has not been severely damaged, even though the rhetoric is harsh, we have not seen an imposition of tariffs on a broad range of goods, but certainly it's disturbing, and if it goes down this path, it will certainly affect the U.S.-China relationship. We have also seen documents which call China a revisionist power, the National Security Strategy in the United States calls China a strategic competitor and a revisionist power, I think those are also damaging the U.S.-China relationship. We've seen the whole policy of engagement being questioned. When I first came to Asia, Asia was at war. Since the establishment of diplomatic relations between the United States and China, Asia has not been at war. I think that has been an effect of this constructive engagement policy that the United States and China have both followed. So it deeply troubles me that people seem to be rejecting a policy that has created peace and prosperity in Asia for these many years.

That was Stephen Orlins, President of US National Committee on US-China Relations, speaking with CRI's Yang Guang on the sidelines of China Development Forum.