Visiting scholar makes case against Trump’s trade war with China

Derek Scissors (left), resident scholar at American Enterprise Institute, and Randall Schweller (right), Ohio State political science professor, discuss the trade war while Peter Masoor (middle), Ohio State history professor, moderates. Credit: Joe Matts | Lantern Reporter

Derek Scissors, resident scholar at Washington, D.C.-based public policy think tank American Enterprise Institute, said during his visit to Ohio State that President Donald Trump’s trade war with China has been ineffective and detrimental.

The Alexander Hamilton Society at Ohio State and Ohio State’s chapter of AEI hosted Scissors for a discussion about the state of the Trump administration’s trade war with China. Randall Schweller, Ohio State political science professor and foreign policy expert, spoke in favor of the trade war.

“Let’s get this straight: There is no trade war. There is a little tap dance, and the president has not done either what I think he was supposed to do or, in some cases, what he said he was going to do,” Scissors said.

The trade war between the U.S. and China has comprised a series of tariffs placed on each other’s goods since mid-2018. The latest U.S. tariffs, introduced in September, are set at 15 percent on $125 billion of Chinese goods, on top of the 25 percent on $250 billion that was already in place, according to a United Nations Trade and Development report. China has set tariffs at 25 percent on $60 billion worth of U.S. goods.

The report found that the trade war has cost China about $35 billion in exports since the beginning of 2019. Change in import prices in the U.S. have fallen on the consumer, although Scissors pointed out that it has only been about a 1-percent increase.

The trade war started with the Section 301 investigation, during which the Office of the U.S. Trade Representative, an executive agency, investigated China for intellectual property theft, according to USTR’s website. 

The report found that Chinese policies are designed to coerce American companies into giving up intellectual property and take over certain advanced technology sectors. Its findings led Trump to issue the first tariffs of the trade war, according to the report.  

Scissors commended Trump’s decision to issue the investigation. He also pointed out that this sets him apart from the past three presidents who he said did not understand China’s economic model and how it was hurting the U.S. and intellectual property.

However, Scissors said Trump’s response to the report’s findings is not correct.

“I know, because I was there, the president immediately turned this into tariff action,” Scissors said. “That doesn’t make any sense.”

Areeb Ahmed, a third-year in finance and treasurer of AEI at Ohio State, said Scissors, who represents a right-leaning institute, taking the anti-Trump position shows the diversity in thought within AEI. He also said the reason the organization hosted a talk about the trade war is because of its wide range of causes and effects.

The tariffs punish several Chinese firms, not just the ones that steal intellectual property and participate in coercion, Scissors said. This means there is no incentive for Chinese firms not to participate in theft or coercion, since they are already being punished as if they are.

Scissors also said forcing negotiation with China — which is the purpose of the tariffs — is difficult because the Chinese government historically does not follow through with agreements. He said the U.S. still does not know what its enforcement methods for deals with China are. 

Scissors recalled a shouting match he had with Robert Lighthizer, the U.S. trade representative, who suggested the U.S. force China to write the agreement into its law. Scissors said he told Lighthizer his solution made no sense because the Communist Party in China is “above the law.” 

“Does anyone in this room think that the Communist Party obeys the law?” Scissors asked the attendees. Some in the audience chuckled in response.

Scissors also laid out his plan for solving the problem of intellectual property theft by Chinese firms.

“The answer is: You spend the effort and time to identify which Chinese firms and sectors are benefiting from the coercion and the theft,” Scissors said. 

Scissors explained that once the U.S. has identified the bad actors, it can target the centrally controlled state-owned enterprises and put sanctions on them as warnings to others.

“Are you going to get them to stop? No. It is part of their development model, but you can get them to change. Undifferentiated punishment doesn’t do that at all,” Scissors said.

During the discussion, Schweller argued for the Trump administration’s decision to start and continue the trade war. He argued that Trump’s actions are the logical effect of shifts in global politics. As China grows stronger and the U.S. becomes less of a leading global power, the U.S. response should be to look out for No. 1, he said.

“It’s almost like the health of the world and the health of the U.S. were one thing, but when power diffuses throughout the system, you no longer see your own national interest and international goods as the same thing,” Schweller said. “Trump was elected to defend the security of the United States. That’s what he’s doing.”

Ahmed said the discussion covered not only policy, but also international relations.

“Trade and tariffs are very nationalistic policy, so on the domestic side we get a little bit of that flavor. In terms of international focus, we also get to hear about our relationship with China, which I think is the larger idea here. We rely on China, and China relies on us, but we’re not necessarily friends,” Ahmed said.