words per minute
17
belalhossain1
00:00
Speed
The US has long been looking to put a brake on China's trade dominance that has greatly overtaken the future of manufacturing in many developed countries since it was granted accession to the World Trade Organization (WTO) in 2001. It has also been long overdue for the US to put a brake on the growing fiscal and trade deficits that threaten the sustainability of American debt management. The tariff war, despite its various criticisms, has turned out to be inevitable for the Trump regime to check both China and the growing deficits. This piece is not an attempt to justify the Trumpian tariff wall that most open market economists oppose, but it is an attempt to see which economics drives President Donald Trump to resort to massively using tariff hikes across the board.
What should be our game plan to tackle global volatility?
China embarked on opening its economy in the late 1970s. It was the 10th largest economy in 1981 and sixth in 2001. The next decade was magical for China, which became the second largest economy in the early 2010s, securing almost an $8 trillion economy while the US economy was then almost $16 trillion. In the following 10 years, China kept chasing the largest economy in the world. By 2021, China's GDP worth nearly $18 trillion became 75 percent of the US economy, which was valued at around $24 trillion. If one can videotape this comparative race, the US has every reason to fear China's pace since it is likely to outsize the US GDP soon.
Google News LinkFor all latest news, follow The Daily Star's Google News channel.
The vital channel of China's rapid growth has been trade, where the country is accused of using predatory prices and keeping its currency value artificially low enough to gain faster export growth to restrain import growth. In 1986, China ranked only 15th in the volume of exports to the US. It was able to elevate itself to the 10th position within two years, and to the fifth position within three years after that. However, it took China 10 years from 1991 to 2001 to become the fourth largest exporter to the US. Only Canada, Mexico, and Japan were ahead of China at that time. China beat Japan and became the third largest exporter to the US by 2002, the second largest by beating Mexico by 2003, and finally seized the top position in 2007. Trump's tariff war is a deliberate way to put a lid on this export expansion by China.
There is a notable quote by Benjamin Franklin, one of the founding fathers of the US, "Rather go to bed without dinner than to rise in debt." And that was the economic philosophy most American leaders believed in. But now the amount of debt is more than $36 trillion for a nearly $30 trillion economy, raising the debt-GDP ratio to as high as 121 percent—which was just 31 percent in 1981 and 54 percent in 2001. Although the debt-GDP ratio for countries like Japan is as high as 256 percent, the US does not want to be like Japan, which kept losing its global dominance since the country began to plunge into debts in the 1990s.