The U.S.-China trade war is heating up in a battle that may last for years to come. Last week President Trump imposed new tariffs on $200 billion of Chinese exports to the United States. The Chinese government responded with tariffs on $60 billion of U.S. goods. The economic effects of this trade war between the world’s two largest economies (the U.S. at $19 trillion and China at $12 trillion) are slowly emerging. While many around the world are ignoring this, the recent damage is only the beginning.
This U.S.-China trade war was primarily caused by confusion. The Chinese government does not understand Donald Trump’s trade goals, because they are not primarily trade goals. Donald Trump has the bit between his teeth. He wants both a victory and public adulation, to feed his ego and to keep a promise to his 2016 voters that he would renegotiate unfair U.S. trade deals. He also fantasizes that he is teaching China who is boss. What’s really going on is that China has been gaining ground on the U.S. in key strategic areas, such as military power, economic influence, and scientific accomplishment, and the U.S. is now turning to aggressively confront a new rival.
In 2015, Chinese President Xi Jinping launched a “Made in China 2025” plan, which clearly targets overtaking U.S. industrial dominance in information technology, advanced machinery, aerospace, and new-energy vehicles, coupled with similar deep efforts in quantum computing, artificial intelligence, and biotechnology. This poses an explicit threat to historic U.S. industrial and scientific preeminence, a paramountcy that has undergirded U.S. global influence and military might since World War II.
Similarly, the Chinese government has recently established a military presence on the Mischief Reef near the Philippines, attempting to establish domain