The Chinese government has imposed huge tariffs on the import of fruit, pork and other items from the United States in retaliation for the administration of President Donald Trump's imposition of curbs on the imports of Chinese steel and other products.
The United States and China are increasingly interdependent on each other economically. If these countries impose high import tariffs on each other despite such relations, their bilateral trade would become sluggish. Moreover, the prices of products imported from each other would rise in their respective markets, increasing the burden on businesses and consumers. If the economies of these countries became stagnant as a result, it would inevitably affect the world economy.
Intensifying trade friction between these major economic powers would benefit nobody and only throw the world economy into chaos.
Nevertheless, bilateral trade friction is feared to intensify. Apart from steel products, the United States has decided to impose punitive tariffs on imports from China on the grounds that U.S intellectual property rights, including those over U.S. companies' cutting-edge technologies, are being infringed in China.
The scale of the new sanctions Washington is poised to impose is likely to be far larger than the retaliatory tariffs Beijing imposed recently. Although the United States is expected to decide whether to actually go ahead with the imposition of the tariffs as early as June, China has already hinted that it will implement large-scale retaliatory measures targeting U.S. soybeans and aircraft, among other items.
Free trade has supported the growth of the post-World War II world economy. If an all-out trade war were to break out between major powers, it would rock the foundations for growth.
The United States and China are responsible for not only maintaining international security but also stabilizing the world economy.
The source of the problem lies in the Trump administration that places top priority on reducing the U.S. trade deficit and has decided to impose unilateral sanctions on China and other countries with which the country suffers a trade deficit.
There are suspicions that steel import curbs and retaliatory tariffs over intellectual property rights that Washington is poised to impose could constitute a violation of World Trade Organization (WTO) rules. This series of actions that the Trump government is taking apparently as part of its "America First" policy would only invite retaliation and complicate problems. Washington should retract its protectionist policies.
To urge China to rectify its practices, the United States can use multilateral institutions such as the WTO or a framework the two countries have for bilateral economic talks.
China should be aware that it is also responsible for the friction. Japan and European countries have also criticized China for its excessive production of steel and infringements on intellectual property rights. Beijing should step up measures to tackle these problems.
Japan is also subject to U.S. steel import curbs, and is demanding that the country be exempted from the measure. However, Japan is also responsible for maintaining the free trade system as a major economy. Tokyo should urge Washington to retract the import curbs at bilateral summit talks later this month.