Is Trump’s Trade War a Self-Imposed Blockade for the U.S. Consumer? How would you like to go to Target or Wal-Mart and find not only high prices but empty shelves at the stores?
That could be one scenario that could come from President Donald Trump’s trade war with China.
The U.S. consumer relies on affordable products at big-box retail outlets, and this aspect of the economy could be in jeopardy.
What is Trump’s economic grand strategy with his tariff push? Will he use the hefty levies against China as a bargaining point for a unilateral trade deal with Beijing, or is this the new normal in which American consumers are penalized for Trump’s folly?
Trump vs. China: Both Sides Send Mixed Signals
The president stated this week that the United States and China are close to a trade deal, with both sides reportedly communicating daily.
Beijing has denied this state of affairs, and it appears that Xi Jinping is unlikely to change his hardline tactics anytime soon.
Trump’s Secretary of the Treasury, Janet Yellen, remains hopeful that the United States and China will reach a mutually beneficial agreement. There is the “opportunity for a big deal here,” he said this week.
Did Trump ‘Blink’ First?
The president took a more conciliatory tone on April 22. The current 145 percent tariff on Chinese imports is “very high, and it won’t be that high. … No, it won’t be anywhere near that high. It’ll come down substantially. But it won’t be zero.”
This statement suggests that Trump was the first to back down during the standoff with Beijing. So far, the likelihood of a deal with Xi Jinping remains elusive.
China Is Digging In But Could Negotiate Soon
China’s position in the tariff war has solidified. “We don’t want to fight, but we are not afraid of it. If we fight, we will fight to the end; if we talk, the door is wide open,” Foreign Ministry spokesperson Guo Jiakun said Wednesday.
Bessent has also stated that the 145 percent tariff with China could be reduced, and it appears that this will be the starting point with China.
But to what end? Some price hikes from the tariffs will be passed on to U.S. consumers. Supply chains could be negatively affected at American stores, leading to empty shelves.
American Business Leaders Are Pessimistic
Trump has been warned of this potential calamity, and it could be the reason he has softened his rhetoric.
Moreover, corporate executives are worried. In a survey conducted this month, 329 CEOs and business owners were asked about their views on the U.S.-China trade stand-off. Seventy-six percent of those polled believe that the Chinese tariffs will hurt their companies.
“Tariffs and the uncertainty of next steps that will be taken by President Trump will lead to very difficult economic times over the next year or two,” Mitchell Metal Products President and CEO Tim Zimmerman told Chief Executive magazine, the entity that commissioned the poll.
China is willing to negotiate specific aspects of its tariffs imposed against the United States. Beijing will exempt some American products from its 125 percent levies. This could include micro-electronics and semiconductors.
Xi is seeking ways to lower the temperature of the dispute, and this could involve talks with other countries as well. We can “work with the international community to actively uphold multilateralism and oppose unilateral bullying practices,” Xi said.
A Complete Trade Deal Will Be Difficult
The real sticking points will be steel, airplanes, and autos. China is seeking U.S. consumers to purchase its new electric vehicles, which is anathema to the White House. Both countries protect their steel industries. Beijing has returned airplanes it had ordered from the United States. China also needs agricultural products from the Americans, including a large amount of pork.
China would greatly appreciate there being no tariffs from the United States, but first, wholesale changes will be needed to correct unfair Chinese trade practices. The Americans believe that China engages in devaluing its currency, flooding the market with cheap goods for artificial levels of increased market share, and stealing intellectual property.
Trade War Creates a Kind of Blockade for U.S. Consumers
But the tariffs are almost creating a situation in which a “blockade” against U.S. consumers has started. High prices and shortages could affect the country, potentially stalling economic growth. Trump appears to be winging it day by day without clarifying his endgame objectives. What level of tariffs is he willing to impose on China, and how soon will substantive talks take place? It appears that both sides are talking past each other. It may be time for Trump to meet with Xi in person at a neutral site, perhaps in the Middle East, which would halve the travel time.
However, a breakthrough could occur at any time without the need for such a monumental summit between Trump and Xi. Nevertheless, direct talks may be necessary soon should the situation with U.S. consumers deteriorate.
Trump must determine what he wants most. Is it the level of tariffs that he would first like to negotiate? Or are non-tariff trade barriers also part of a more comprehensive agreement? The final deal may also mention China’s supply of materials for the production of fentanyl in Mexico.
Trump seems to be taking it a day at a time, but financial markets are restless as the news changes by the hour. This is indicative of how perilous the situation is, and the U.S. consumer may have to pay a heavy price in the future if the trade war does not abate soon.
About the Author: Dr. Brent M. Eastwood
Brent M. Eastwood, PhD, is the author of Don’t Turn Your Back On the World: A Conservative Foreign Policy and Humans, Machines, and Data: Future Trends in Warfare, plus two other books. Brent was the founder and CEO of a tech firm that predicted world events using artificial intelligence. He served as a legislative fellow for U.S. Senator Tim Scott, advising the senator on defense and foreign policy issues. He has taught at American University, George Washington University, and George Mason University. Brent is a former U.S. Army Infantry officer. He can be followed on X @BMEastwood.
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