This commentary appeared in the print edition of the Jan. 6, 2020, Journal of Commerce Annual Review and Outlook.
The opening salvo was fired in January 2018 with the imposition of tariffs on imported washing machines and solar panels, many of which are made in China. Two years down the road, the tariff war has intensified, with $160 billion worth of Chinese exports at risk of being subjected to a 15 percent US tariff imposition. China’s retaliatory actions have impacted US agricultural exports negatively, but given the huge trade imbalance, China clearly has more at stake in this battle.
It is clear that this is much more than just a matter of tariffs and trade balance. What is masquerading as a tariff war is in fact the fallout from a “cold war” between the two superpowers. The military might of the US is being countered by China through its aggressive technological advances and grand plans such as the “One Belt, One Road” initiative.
Irrespective of the outcome of the 2020 US presidential election, the relationship between the two countries is likely to remain thorny for the foreseeable future.
It behooves those in the logistical sphere that are impacted — the retailers, ocean carriers, ports and terminal operators, railroads and truckers, and other service providers — to adjust their plans and strategies for the medium to long term. Trans-Pacific trade flows will gradually change as sourcing becomes diversified.
This murky picture could only change with pragmatic leadership on both sides, who are prepared to have an honest dialogue on all the underlying issues and bring about a thaw in the relationship.
The more likely scenario is that anti-China rhetoric could be a vote-getter in the 2020 U.S. presidential election campaign, and keeping China as the whipping boy could be a convenient political ploy.