World Economy

Trump is 'a symptom and not the cause' of the trade war with China

Key Points
  • Escalating trade tensions between the United States and China would have manifested with or without Donald Trump, experts said at the Singapore Summit on Saturday.
  • "I think we must not exaggerate the importance of Trump," said Dani Rodrik, a professor at Harvard University, pointing to structural problems in the world economy.
President Donald Trump takes part in a welcoming ceremony with China's President Xi Jinping on November 9, 2017 in Beijing, China.
Thomas Peter-Pool | Getty Images

Escalating trade tensions between the United States and China would have manifested with or without Donald Trump, experts said at the Singapore Summit on Saturday.

While the U.S. president's "crazy" ways have worsened it, he's only a symptom of world developments that have hastened the tensions, and not the cause, pointed out Dani Rodrik, a professor at Harvard University.

"I think we must not exaggerate the importance of Trump," said Rodrik, who is a professor of international political economy at the John F Kennedy School of Government at Harvard.

"I think Trump is very much a symptom and not the cause ... Whether Trump is president of the United States or not, in many ways we'll be facing such tensions," he said pointing to structural problems in the world economy and competition between rising economic and political powers. "These are broad-based reactions to the kind of economic policies that we've pursued in the last quarter century."

"Unfortunately, Trump isn't making it easy for us because of the crazy way in which he's managing it," added Rodrik.

He said the upside of it all was that Trump has "instincts" but unfortunately, no long-term strategy.

Some examples of his "basic instincts" were that "exports are good, imports are bad," Rodrik said. "Whatever is good for me must be bad for you, and vice versa," he added.

"On the other hand, he's not the kind of person who follows through, he can be easily diverted," he concluded.

The U.S. and China have been locked in a trade battle, imposing tit-for-tat tariffs on each other. In Trump's latest move, he reportedly approved tariffs of another $200 million on Chinese goods which could be come as early as this week.

George Yeo, Singapore's former foreign minister, said at the conference that the "big story" here was the rise of China. The trade war is but one manifestation in the tensions between the world's two largest economies which could go on for years, he added.

There's a growing anxiety in the U.S. about China's rise, said Yeo, who is currently chairman of logistics company Kerry Logistics Network. He pointed to how former White House Chief Strategist Steve Bannon said it was an "economic war" and not a trade war.

"For Peter Navarro, it's Death by China," Yeo added, referring to Trump's trade advisor and fierce China critic, who wrote a book of that title.

"It's not difficult for an economic war to become a political war to become a real war," he said.

Both superpowers need to find some kind of "accommodation" in this multi-polar world, Rodrik stressed. China may say that it knows how to manage its economy, and the West needs to recognize Asia's largest economy has its own model.

"On the other hand, I think China will need to understand that it has been a free rider on the system created by the U.S., of openness, and it would have to provide a certain amount of ... policy space for the Europeans and the Americans too," he said, adding that this would be an example of "peaceful co-existence."

"China is playing the long game," Rodrick's said, and the question is how the world can accommodate such a new power.

"I view Trump really as a temporary phenomenon, there are deeper issues," he concluded.

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