Why the U.S. and China would both lose a new cold war

With each passing day, the U.S.-China standoff is looking less like a trade war and more like a “new cold war” between the world’s two most powerful countries, writes Wharton Dean Geoffrey Garrett in an opinion piece, which originally appeared on LinkedIn. Here’s a glimpse:

With escalating threats of higher American tariffs on more Chinese imports, followed inevitably by Chinese tit-for-tat retaliation on American exports, talk of a trade war is everywhere. But the Trump administration’s strategy is about far more than trying to level the playing field in trade, with potentially much worse consequences for both countries, and for the global economy and global stability.

The U.S. claims that Chinese trade is unfair—because of government subsidies, restricted American access to the Chinese market, and manipulation of the Chinese currency, among other things—and hence merits tough tariffs. But that is only the beginning.

The Trump administration goes on to assert that the entire Chinese model of economic development is illegitimate, and antithetical to the open and free global economy supported by the U.S.—because the Communist Party government’s reach extends to every aspect of the Chinese economy.

Add to this the last Trump contention: China’s aspirations to become a global leader in technology are a threat to American “national security” because so much of modern technology is potentially “dual use,” with both commercial and military applications.

While pre-Trump policy was constantly looking for win-wins with China, Trump believes there are no win-wins, only win-loses. For America to win, China must lose.

With each escalating assertion, the situation is looking less like a trade war and more like a “new cold war” between the world’s two most powerful countries.

Read more at Knowledge@Wharton.