It’s not a new Cold War. But the dispute between the world’s two largest economies could still reorder the world.
“New U. S.-China Tariffs Raise Fears of an Economic Cold War,” proclaimed a Washington Post headline. The New York Times alleged that the United States and China were already “on the cusp” of such a “new Cold War.” Driving this hysteria was the Trump administration’s Monday announcement unveiling tariffs on an additional $200 billion of Chinese imports, followed nearly immediately by a Chinese promise to retaliate. This back-and-forth has been ongoing since January, and a resolution does not seem anywhere close, if one’s even possible.
As the U. S.-China competition expands across multiple domains, there are even worries that trade tensions could, over the long term, make the prospect of a military confrontation between the two more likely. Which raises the urgent question: How does this end?
It’s perhaps simpler, and certainly more rhetorically arresting, to predict a new Cold War, resulting in a global economy split between two power centers. But the reality of where Washington and Beijing are most likely to arrive in the next decade is far more complex. The United States and China are forging a new, uncharted gray area—not quite the economic bifurcation that characterized the U. S.-Soviet relationship at the height of the Cold War, but far from the high degree of interdependence seen in the early-21st century. Broad U. S. support for a harder economic line on China, a complicated domestic political landscape within China, and both countries’ recognition of the need for a healthy diversification of their economic relations will likely mean a new kind of relationship for the United States and China—and, by extension, a potentially new backdrop for the order of our world.
A trade war isn’t a real war.
While tariffs are undoubtedly a distinctly Trumpian weapon, politicians on both sides of the aisle generally agree that China’s habitual intellectual-property theft, forced technology transfers, and joint-venture requirements significantly impair the future health and competitiveness of America’s leading businesses. In 2014, President Barack Obama delivered public comments lambasting China’s approach to intellectual-property protection and state-owned enterprises. Just this March, Senator Elizabeth Warren noted that the past two decades of U. S. policy, which sought to engage China in order to secure concessions on market access for U. S. companies, was misguided. Senator Chuck Schumer has publicly said that one of the only Trump policies he supports is the administration’s tougher China approach.
So although key constituencies, such as the U. S. Chamber of Commerce, argue that tariffs are an inappropriate tool to prosecute the trade war, it is clear that a change in administration will not substantially diminish America’s appetite for systemic change in the economic relationship.
