A Long-Term Trade War Is a Lose-Lose Scenario

John Dale Grover

economy, Americas

A weaker economy means less tax revenue to spend on vital domestic programs and on maintaining America’s world-class military.

The economic pain of the trade war with China has caused President Donald Trump to put a partial pause on a planned increase in tariffs. On August 13, the U.S. administration announced that the new 10 percent tariffs on certain consumer goods would be delayed until December 15 to spare American consumers during the holiday season. As a result, Americans won’t have to worry as much about if they can afford toys, laptops, phones or shoes for Christmas—for now.

While this pause is good news, it is still a long way from restoring the economic truce Trump and Chinese President Xi Jinping reached during the G20 summit in June. Although the negotiators for both countries met again recently, Trump wanted to impose 10 percent tariffs on $300 billion worth of Chinese imports by September 1. Tuesday’s announcement offers some reprieve and may also dampen China’s retaliation.

This trade war is undermining America’s economic prosperity and could damage U.S. security, affecting $737.1 billion worth of goods and services that citizens of the two most powerful countries in the world rely on daily. Washington should negotiate a concrete cease-fire before each side falls into an escalation spiral, for economic prosperity—the foundation of national power—is a vital U.S. interest.

Though the administration has cast them as a punishment for China, U.S. tariffs make everything more expensive for average Americans who need to make ends meet. But the costs of the trade war aren’t only economic. This dispute also has real political and security costs. A weaker economy means less tax revenue to spend on vital domestic programs and on maintaining America’s world-class military.