GOP frontrunner Donald Trump has consistently stated that under his administration, the United States will renegotiate all trade policies. This would include slapping a 45 percent trade tariff on China as a way to force it to “deal fairly and justly” so that the US is not thought of as “fools.”
The Donald continued his heated rhetoric on Sunday during a campaign rally in New York on Sunday, saying that China has waged an economic war against the US:
“They’ve taken our jobs, they’ve taken our money. We can’t continue to be ripped off like we’re being ripped off.”
In an interview with the Wall Street Journal, the Chinese Finance Minister, Lou Jiwei, has hit back at Trump’s hyperbolic views, calling him irrational:
“Trump is an irrational type. If he were to do this, that would be in violation of the rules set by the World Trade Organization.”
Mr. Lou added that the GOP frontrunner needs to realise that the US and China need each other and that both would lose should there be an economic confrontation:
“The U.S. and China are mutually dependent on each other. Our economic cycles are intertwined. We have more in common than sets us apart.”
Mr. Lou further warned that the US would no longer be entitled to world leadership if a Trump administration implements policies that violate WTO trade rules.
The GOP frontrunner has made it clear that he does not fully understand how the global economic system works. Higher trade tariff’s would almost certainly be passed on to US consumers, who will suffer prices increases.
In addition, unlike most countries, China is in a position to impose retaliatory measures against the US should the 45 percent tariff increase be implemented. China is US’s largest trading partner, and holds a significant portion of US foreign debt. In reality, Trump’s proposed trade tariff policies will actually harm the economy of the United States.
Featured image via Getty/Eduardo Munoz Alvarez.
