Trade War Anomaly: Why Northern Europe Sells More to China, Proportionally, Than We Do
(American Prospect) China’s trade practices pose a barrier to broadly based American prosperity, and in his 2016 presidential campaign, Donald Trump effectively railed against the indulgence of those practices by past administrations. Trump’s own inept trade negotiations, however, have not reduced such practices. Rather remarkably, Trump has managed to significantly worsen the United States’ trade deficit with China: U.S. imports from China are up while U.S. exports have dropped precipitously.
State subsidies for companies that export, tariff barriers, intellectual property theft, forced technology transfers, and similar trade pathologies are deeply rooted pillars of China’s authoritarian governance. And despite offering only modest prospects, there are realistic policies for recalibrating Chinese mercantilism, as David Dayen, among others, has identified.
The problems inherent in U.S. trade policy run deeper than Trump’s ineptness. They will likely persist, and Trump will fail to meet his 2016 promises to American workers, unless and until U.S. corporate governance is upgraded. American corporate boards must shift their goal to prioritize the prosperity of local communities and employees as well as shareholders.
To be sure, Trump’s China tariffs have caused U.S. firms to vote with their feet. But rather than surging homeward to build factories in Wisconsin or Michigan, at least 50 American firms are fleeing China to relocate their plants in that nation’s lower-wage neighbors, most particularly Vietnam. American-style shareholder capitalism systematically discourages the building of a domestic production base for domestic consumption or for exports to China or anywhere else. Instead, corporate boards offshore production with abandon. The U.S. trade balance with China makes that unmistakably clear: In 2017, Americans imported $526 billion worth of goods from China, while exporting only $130 billion worth of goods there.
Other nations with comparably advanced economies have avoided this level of economic dysfunction. When it comes to our trade balance with China, for instance, we vastly underperform the nations of Northern Europe.
A cargo ship is loaded with containers in Qingdao City, China
Yu Fangping/Imaginechina/AP Images