Is the US actually too chicken to take on China for trade?
A weak yuan guarantees Beijing massive trade surplus even as the White House tries tamp down on Chinese imports
TL;DR
- US imports from China have fallen, but this doesn't equate to winning the trade war as China's share of value added in imports remains high.
- The White House's new AI border 'detective' tool to identify transshipped goods is seen as a complex 'Whac-A-Mole' game.
- Despite efforts, US manufacturing employment has not significantly increased, and the US import bill remains high.
- The undervalued Chinese yuan is identified as a critical driver of China's massive exports, swamping the US and threatening global industrial development.
- While economists point to domestic factors for China's surplus and US deficit, the article argues that exchange rate intervention could provide necessary pressure for policy changes.
- China's export dominance has grown significantly, weighing heavily on global economies.
- The Plaza Accord and the yuan's appreciation after the global financial crisis are cited as evidence of currency's power in trade rebalancing.
- Revaluing the yuan could induce other policy changes, stimulating Chinese domestic consumption and potentially encouraging fiscal restraint in the US.
- The US has tools like Section 301 of the Trade Act to pressure China on currency undervaluation, and could coordinate with allies.
- The current approach of targeting weaker countries for transshipment is seen as a failure to confront China directly due to a lack of willingness.