Xi’s Heat Level: A Blazing Trade War Win

  • + Xi has a blazing upper hand in Trump’s Trade War.
  • + Self-proclaimed “tariff man” has tended to favour economic war tactics.
  • + Xi stayed tough and the Trump administration argued within itself.
Johannes Eisele | AFP | Getty Images

What is the US-China Trade War?

The world’s biggest economies, China and the U.S. have been locked in a trade battle for over a year now. This dead-end trade barrier conflict haunts the Trump administration, which initiated the dispute.

The Trade War between Trump and Xi Jinping is the economic conflict resulting from extreme protectionist trade policies-raising and creating tariffs and other trade barriers- against each other. As of now, Trump has imposed tariffs on more than $360bn of Chinese goods, and Xi Jinping has retaliated with tariffs on more than $110bn of US products.

Trump’s favourite game

Economic war is nothing new for the U.S. and it seems to be one of the more favoured approaches for the self-proclaimed “tariff man” A.K.A. President Trump.  China is not the only country to experience Trump’s tactic of economic leverage and it seems to work. Canada, Mexico, and the E.U. have also experienced Trump’s “wrist-twisting.” 

Nevertheless, Trump’s poser policies and trade barriers have been heavily criticised to do more harm than good to the American Economy. The consequences of this Trade War fall on the end consumers, and the results may last for many years to come. It is important to understand that the tariff war goes both ways: farmers that mainly rely on Chinese exports, or customers that rely on cheap Chinese products. For example, China imposed a tariff of 25% on soybeans grown in the U.S. and replaced its loss from Brazilian farmers. And so, American farmers are now experiencing the consequences of Trump’s impulsive and stubborn trade policies.

If so harmful, why does Trump pursue? Trump’s business approach to his administration is nothing new, and stubbornness and impulsive decision-making is the result. By attempting to show his voters that he is making “America great again,” Trump’s Trade War is chasing after the voters of 2020 presidential elections. Trump is attempting to show voters his effectiveness and the strength of the U.S. government under his administration against the threateningly growing market of China. However, this round of the war has proven otherwise.

Xi’s Blazing Upper Hand

On the other hand of the Pacific, Xi has demonstrated his best skills in this war, staying tough and letting the Trump administration argue within itself. For the first time in history, Xi seems to have the upper hand against Trump and the U.S., and by digging in his heels and staying tough, he struck the first round at the Trade War. While the White House called it a win, for the first time in a year and a half, Trump reduced tariffs worth more than 100 billion USD on Chinese goods. So much for a “tariff man.”

Xi’s victory is showing the world that the U.S. is not the hegemon it used to be. The world is becoming more bipolar – which is why the victory of the Trade War is so important for both sides. This victory round of Xi is not only a demonstration of the strength of the Chinese economy over the U.S. but also it is a great relief for the American public, which heavily relies on Chinese goods. China will once again supply the goods that the American Capitalist culture cannot live without – toys, smartphones, etc.

What is the future holding for the Trade War?

Yet again, this is only the first victory of many rounds in this Trade War between the largest and strongest economies. The economic tensions in the air are felt across the globe and will most likely determine the shape of an increasingly bipolar world.

Xi might have won this battle but the Trade War is yet to conclude. Who will triumph next? Will the “tariff man” give in again? Will Xi Jinping’s tough stand remain and prevail? We are expecting more escalations soon enough, as neither Xi nor Trump will like to be called the “loser” of the Trade Wars.

Ariel Eva Segal

Team Member of Research & Analysis