San José, CA–Can the Trump administration win its trade war with China? This question is coming up more and more. On one hand, the Trump administration uses simple math to argue that the United States has the upper hand. Their logic is that since the United States has a large trade deficit with China in goods–that is the United States buys a lot more, almost $300 billion more from China in 2024, than China buys from the United States–then tariffs can reduce China’s exports a lot more than China can reduce U.S. exports.

　　On the other hand, China does not accept this. China was fairly restrained in responding to the first two 10% tariffs leveled by the United States. But once the United States kept raising tariffs, China responded in kind, eventually raising their tariffs to 125% on U.S. items. China stands ready to begin negotiations with the appointment of a chief trade negotiator, Li Chenggang, who was China’s chief negotiator at the World Trade Organization.

　　China has been actively increasing its domestic market to rely less on trade for the last 15 years. Further China has expanded trade with other nations to reduce the percentage of exports going to the United States. 25 years ago, China was the leading trade partner to less than 20 countries, all in Asia, Africa and Cuba. Last year it was the United States that was the leading trade partner to less than 40 of the 190 countries and regions of the world, almost all in the Americas and Europe. China was the leader in trade with almost all developing countries and even led in trade to U.S. military allies such as Japan and South Korea.

　　Another thing would be to look at the details of who buys what in the China/U.S. trade relationship. The single largest product that China buys from the United States is soybeans, which China can buy from other countries such as Brazil. The same goes for the second largest products, oil and gas, which China can buy from many other countries such as Russia, Saudi Arabia, Iraq and Oman.

　　On the other hand, Chinese machines are the single largest item bought by the United States–not consumer goods as many people think. While the United States does have other sources of machinery, to import more from Mexico, Japan, Canada and Germany would still cost significantly more, as Trump has tariffed all these countries. The second biggest U.S. import from China is nuclear reactor equipment. Russia is a leading exporter in this field, but U.S. sanctions prevent buying from them anymore.

　　In particular, the United States (and the rest of the world) relies on China as a source of so-called “rare earth” metals–which are not really that rare. While deposits of these rare earths are widespread, China has a near monopoly on (92%) the processing of these metals from their ores. China’s rare earth processing is dominated by state-owned enterprises or SOEs. One of the roles of SOEs in China’s socialist economy is to have lower profit

　　Editor: Zhong Yao  LiuTingting

　　From:https://fightbacknews.org/articles/can-the-trump-administration-win-its-trade-war-against-china.