Illustration: Liu Rui/GT

US President-elect Donald Trump said on Monday that on his MK socksfirst day in office he would impose a 25 percent tariff on imports from Canada and Mexico, and an additional 10 percent tariff on imports from China, as part of his effort to crack down on illegal immigration and drugs. This rhetoric is unacceptable to China, as numerous facts have already proven that the idea of China knowingly allowing fentanyl precursors to flow into the US runs completely counter to facts and reality. For both China-US economic cooperation and the still-shaky global economic system, the US' provocations in restarting a trade war will have severe negative consequences.

During a recent visit to the US, I had discussions with American officials on the issue of imposing additional tariffs on China. Rational voices in the US acknowledge that the proper way to address the trade imbalance between China and the US is through candid communication and pragmatic cooperation. Neither side should allow, or even encourage, one party to impose tariffs on the other. The experience since 2018 has shown that tariffs are a pressure tool in international relations that benefits neither side. Imposing tariffs or instigating a trade war does not lead to industry reshoring or strengthening domestic supply chains. The global free trade system, which has been widely recognized and practiced around the world, may not be perfect, but it remains an irreplaceable pathway for driving effective global economic growth and advancing human welfare.

The last two US administrations have escalated the weaponization of tariffs, using hefty tariff hikes to suppress China. However, the facts have repeatedly shown that this approach has failed to sever China-US economic ties or achieve the US' illusory "decoupling" goal. Despite China no longer being the US' largest trading partner, attempting to drive China-US bilateral trade into a "free fall" through tariffs is neither realistic nor advantageous for the US. It is clear that tariffs cannot achieve the goal of containing China's high-end manufacturing development. Nor can they force China to "rejoin the WTO" on US terms. In today's world, no single power, or even multiple powers can easily sever China's core value chains.

After multiple rounds of tariffs and trade bullying that have yielded little result, more and more people within the US are realizing that it is fundamentally unfeasible to create supply and industrial chains that exclude China. Attempting to separate "Made in China" or Chinese intelligent manufacturing from the global mid- to high-end value chains is a mission impossible. After all, the US is facing an economy with a GDP close to $20 trillion, whose comprehensive national strength continues to rise. Today, China is a major trading partner for over 150 countries and regions. As the world's top trading nation in goods, China consistently leads in attracting foreign investment and making outbound investments. The enormous market space, economic power, and development prospects behind this are not something that US tariff hikes can undermine.

Faced with these realities, some American figures, including Treasury Secretary Janet Yellen, have begun to shift their stance. They now advocate for "de-risking and diversification" in economic relations with China under the overarching principle of not seeking decoupling, by increasing investment in American manufacturing and advanced technologies and strengthening partnerships. Meanwhile, they recognize the importance of cooperating with China to stabilize macroeconomic conditions and addressing global challenges, all in service of US global policy objectives. 

Tariff wars have proven to have a counterproductive effect on the initiating party. Despite the strength of the "dollar-centered" or "dollar hegemony system," without solid domestic industries and a favorable external trade environment, the US will eventually face greater economic challenges, even as it enjoys the benefits of dollar dominance. The US is eager to boost its economy and maintain its international competitive edge in trade, technology, and other areas, but wielding the tariff stick is not a rational choice. Time will prove that any nation seeking long-term economic prosperity must engage in pragmatic cooperation with others on an equal and mutually beneficial basis - and the US is no exception.

The author is a professor at the School of International Finance and Trade, Shanghai International Studies University. [email protected]