The U.S. government’s recent tough measures on trade have raised concerns over China-U.S. economic ties, but analysts on both sides of the Pacific say the world’s two largest economies have better choices.


China has made it clear that it wants healthy and win-win trade cooperation with the United States, but recent months have indicated that the latter has other calculations.

In late January, U.S. President Donald Trump approved imposing safeguard tariffs of up to 50 percent on imported washers for the next three years and of up to 30 percent on solar cells and modules for the next four years.

The move marked the first time since 2001 that the U.S. government has used Section 201, an outdated tool under the rarely used Trade Act of 1974, to unilaterally impose tariffs or other trade restrictions on foreign imports.

In the latest trade protectionist move by the Trump administration, the U.S. Commerce Department on Tuesday launched anti-dumping and countervailing duty investigations against imports of large-diameter welded pipes from several countries, including China.

Moreover, Trump on Tuesday threatened further actions against his country’s two major Asian trading partners, warning of sanctions against China while vowing to revise or scrap a free trade deal with South Korea.

The president said he was “considering all options,” including tariffs and quotas.

The Trump administration is now focused on altering “trade and current account imbalances,” Dana Peterson, director of North America economics with Citi Research, told Xinhua in a recent interview.

Besides renegotiating trade agreements, the United States is also more publicly pursuing complaints in the World Trade Organization (WTO), launching high-profile investigations of “tax and trade abuses,” and imposing punitive trade actions, she said, adding that “the current course is likely to continue throughout 2018.”

There is a significant risk of further anti-China trade actions by the Trump administration, said Stephen Roach, a senior fellow at Yale University’s Jackson Institute for Global Affairs.

Last August, the U.S. Trade Representative launched so-called Section 301 investigations against China in three broad areas: intellectual property rights, innovation and technology development. This is likely to lead to follow-up sanctions.

Meanwhile, Washington has initiated a Section 232 investigation into the “national security threat posed by unfair steel imports,” which takes dead aim at China, the world’s largest steel producer, Roach said.

“If those additional actions occur, I fully expect China to retaliate with trade sanctions of its own on U.S. exporters — a tough blow to America’s third-largest and most rapidly growing export market,” Roach said.

“China is concerned about the U.S. side’s serious trade protectionist tendency in the field of steel products,” said Wang Hejun, head of the trade remedy and investigation bureau under China’s Ministry of Commerce, in a statement on Tuesday.


The increasing protectionism on the U.S. part has led to frequent trade frictions and even triggered worries about a possible trade war between the top two economies.

“Trade wars would not be beneficial for the U.S., from an economic point of view,” Peterson warned.

Trade wars would likely diminish global trade, which is bad for global growth, and certainly for the nations involved.

From the U.S. perspective, trade wars would reduce U.S. exports, weighing on its gross domestic product (GDP) growth. Additionally, trade wars would likely raise U.S. import prices and consumer inflation.

“If inflation hastens too quickly or excessively, reduced consumer demand would cap consumption growth, and subsequently business capex (capital expenditures),” she said.

Many others agree. Donald Straszheim, senior managing director and head of Evercore ISI’s China Research Team, said both governments should be aware that a trade war is a lose-lose option.

“No one benefits, or wins (from a trade war),” Roach told Xinhua, pointing out that tariffs on solar panels and washing machines could also raise retail prices for U.S. consumers.

The Korean company LG Electronics, a major foreign supplier of U.S. washing machines, has already announced a price increase of 50 U.S. dollars per washer in response to the new tariffs.

Meanwhile, the U.S. Solar Energy Industries Association has estimated that tariffs on solar panels will not only result in a loss of 23,000 American jobs this year alone, but will also lead to the cancellation of billions of dollars of solar panel installations — a major setback to America’s non-carbon clean energy imperatives.

Analysts also warned about retaliatory measures from China.

“One of the first places I think the Chinese would retaliate would be by reducing significantly the purchase of soybeans from the United States,” Andy Rothman, an investment strategist at Matthews Asia, said at a January event co-hosted by SupChina and China Institute.

Trump will have a lot of Republican congressman from the Midwest saying “we could lose some significant number of seats during the midterm elections,” Rothman said.

He also said that people do not hear very much from the American companies that are doing well in China.

For example, GM sells more cars in China than it does in the United States; Boeing delivers more aircraft in China than it does here; about half of the U.S. soybeans are going to China.

“U.S. exports to China have grown by 500 percent since it joined the WTO,” he added.

Data from the Office of the U.S. Trade Representative showed that U.S. exports of goods to China in 2016 were 115.6 billion dollars, accounting for 8 percent of overall U.S. exports in 2016 and up 503 percent from 2001 (pre-WTO accession).

Statistics from the U.S. Department of Commerce show that U.S. exports of goods and services to China supported an estimated 911,000 jobs in 2015, according to the latest data available.


As leading members of the WTO, the United States and China should rely on the WTO dispute mechanism as the first line of defense in dealing with the inevitable trade disputes that arise between the two nations, Roach said.

“This is far preferable to unilateral actions taken by one nation that then lead to escalating retaliation by the other,” he said.

At the same time, the United States and China should move quickly to restart the seemingly dormant negotiations for a Bilateral Investment Treaty (BIT).

A BIT could provide a framework for rules-based market access, allowing for fair and equitable operations of American and Chinese multinational corporations in each other’s home markets.

“As such, a high-standard BIT would go a long way in pre-empting future disputes over trading practices that have put the U.S. and China on the brink of a major trade war,” Roach said.

Since Trump prefers to have bilateral trade agreements and one-on-one talks with top decision-makers, Peterson suggested the two nations try those options to make progress on trade.

“Given the immense challenges we face as a global community, our two countries must work together productively in order to build a better world for all of our citizens and other citizens around the world,” said Stephen Schwarzman, chairman and CEO of the Blackstone Group, at a Chinese Lunar New Year Gala last month.

“If we proceed from a foundation of mutual respect and understanding, we will identify areas of common interest and together meet challenges ahead,” Schwarzman said.

“It’s my firm belief that the relationship between the United States and China will define the 21st century,” he added.