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What’s Next in the U.S.-China Trade War

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The Trump administration’s mantra that “economic security is national security” has led it to call Canada a national-security threat, only to backtrack. Last week, the administration declared that the innovation that goes into building new cars and trucks is an essential part of the defense-industrial base—taking logic past administrations have used and applying it in a radical new way. Part of the problem is that even if the U.S. and China are as deeply politically opposed as the administration claims, there’s no good model for moving forward. “I can’t think of a good case where the world’s two largest economies with a high degree of integration deliberately take steps to decouple themselves from one another in peacetime,” Douglas Irwin, an economic historian at Dartmouth University, told me in an email.

As national-security thinking metastasizes, otherwise healthy economic organs will suffer. It’s easy to get the impression that every Western company in China is getting ripped off, but that’s not quite right, Mary Lovely, an economist at Syracuse University who has studied the tariffs effects on supply chains, told me. “If you look at the boring companies like Proctor and Gamble, who are selling tons of dish soap, clothes soap, and diapers—no one has accused the Chinese of stealing the special beads that keep your kids’ bottoms dry in the morning.” (I emailed Proctor and Gamble to confirm that claim, which otherwise appears true, but I didn’t hear back.)

The challenge with conflating economic and national-security concerns isn’t that one or the other is wrong. The difficulty is that the national-security directive is all-consuming, obscuring the profound economic asset China has become for Americans. China’s production marvels have saved consumers money, to be sure, but they’ve also changed Americans’ lives in more subtle ways. One is that products don’t fail nearly as often as used to. “You go to Target and buy a TV for 50 bucks, and it works,” said Lovely. Companies manufacture in China because China is good at making their products cheaply. It has roads, electricity, and a healthy, educated workforce; others do too, but not on China’s scale. Those assets have allowed China to make ever more of the world’s goods—not just televisions. “Think about the life or death stuff,” said Lovely. “They’re making airport doors or wings. They’re making artificial knees. You can’t have an artificial knee that fails. The supply chain is actually certified by U.S. regulators from start to finish.”

The administration’s only move is to increase the pain until the deal Trump’s negotiators have offered starts looking appealing to China. The point may not be to hurt Americans, but it’s the only means to achieve the ends Trump says he wants. Sooner or later, the pain will leave a mark.

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