From the establishment of the People’s Republic of China in 1949 to the ongoing trade war, the U.S. and China have a long-standing history of social, political, and economic relations.
Although recent conflicts have raised tensions between the global superpowers, the current tariffs may steer the U.S. and China toward new paths and bring brighter futures. Those opposed to tariffs may argue that such positive outcomes are unlikely and should not be depended on; however, we should give the tariffs a chance.
In the summer of 1950, the U.S. intervened in the Korean War to support the Southern forces, while the Chinese opposed the U.S. by aiding North Korea. The two nations continued to clash during the First Taiwan Strait Crisis, the Vietnam War, and the Tibetan Uprising.
Starting in 2010, tensions began to rise over trade. As China quickly grew as a global economic superpower, a trade imbalance between the two countries sparked concerns among officials and citizens alike.
This brings us to the current trade war. The Trump administration’s objective with these tariffs is to remedy the U.S.’s trade deficit and imbalances; address unfair trade tactics such intellectual property theft; negotiate more advantageous trade agreements; and bring back U.S. manufacturing. Paying higher prices for goods will anger the average consumer, but the trade war could eventually benefit both countries on multiple fronts.
First, the tariffs could revive U.S. manufacturing. U.S. companies have already begun moving away from Chinese production. In 2019, IndustryWeek reported that Dell and Hewlett Packard were planning to move 30% of their notebook production out of China; and earlier this year, HP CEO Enrique Lores announced that the company will have shifted 90% of its production to North America by the end of the fiscal year.
Tariffs incentivize U.S. businesses to produce domestically, increasing employment opportunities, eradicating transportation fees, and working to bring back the industrial power that once defined the U.S. By designing, producing, and exporting products in the U.S., domestic businesses can maximize profit.
China experienced incredible economic growth over a short period and became a manufacturing powerhouse. Yet, its export-driven economy suffers from dependence on international trade.
The recent tariffs could push China’s domestic market to grow. A drop in international sales and demand for overseas manufacturing will encourage Chinese corporations to develop designs and ideas for products curated for the Chinese people.
Appealing to local consumers would not only stimulate local economies, but lead to the growth of their middle class by increasing domestic traction and incentivizing innovation and consumer spending. Strengthening China’s domestic economy to match its strong manufacturing and international market share will enable the nation to stand tall.
Even though the tariffs appear to be contributing to declines in the stock market, this volatility largely stems from the inconsistency of the Trump administration’s application. If the tariffs stay in place, the U.S., China, and the rest of the world will be able to adjust over time. Although China and the U.S. may currently face political, economic, and social instability, Trump’s tariffs have the potential to set both nations on a path to long- term success. The U.S. could finally regain power in the manufacturing realm and China could finally expand its domestic market.
While the future of U.S.–China trade is unknown, maintaining strategic and consistent tariffs might provide a more stable and prosperous future amid present challenges.
