#3 The U.S. isn’t alone
Mr. Trump’s steel and aluminum tariffs were widely panned for hitting both China and law-abiding allies like Canada and western Europe alike.
By contrast, his ire at China is widely shared. French President Emmanuel Macron has called for a unified European Union policy against Chinese corporate takeovers.
“Everyone who trades with China faces this problem,” Peter Navarro, Mr. Trump’s trade adviser, told reporters Thursday. “Part of the process that we’ve undergone … is to have a significant outreach to our like-minded allies and trading partners.”
#4 China isn’t like Japan
For decades, Japan, like China now, sought to help Japanese firms by limiting foreign access to its market, providing direct industrial support, and pushing western companies to license their technologies. Japanese companies did catch up in autos, electronics and computers, but the U.S. leapt ahead in new industries such as software and services. Japan’s economy entered a long slump in 1992 and hasn’t entirely escaped. Some say the current panic about China is similarly misplaced.
But Japan is different. It is a military ally and is thus sensitive to U.S. pressure on trade. China is a geostrategic rival pursuing and sometimes stealing U.S. secrets for both civilian and military purposes. Where Japan is democratic and transparent, China is authoritarian and opaque.
The scale is also different. Mr. Irwin notes that in 1987, President Ronald Reagan hit $300 million worth of Japanese imports with 100% tariffs for its failure to open its market to U.S. semiconductors. That pales next to the $50 billion worth of damage Trump officials say China’s trade practices inflict.
“New plays and musicals are often tried first in Philadelphia or Boston before going to Broadway,” says Clyde Prestowitz, president of the Economic Strategy Institute. “Well, Japan was Philadelphia. Now, with China, we’re on Broadway.”
Japan was reluctant to retaliate because it valued its political and strategic ties with the U.S. China under President Xi Jinping is turning more nationalist and adversarial, making it more willing to retaliate than Japan was.
This, however, means that the collateral damage of a trade war, and thus the risks of Mr. Trump’s strategy, are also much greater. The breadth of his action elevates the potential harm to American consumers, supply chains and exporters.
Mr. Irwin says it isn’t clear that Mr. Trump’s strategy is right. Taking China to the WTO might be a less dangerous approach. But he adds: “No one is saying we shouldn’t do anything.”
Copyright The Wall Street Journal 2018