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(EDITORIAL from Korea Times on July 7)

All Headlines 09:58 July 07, 2018

Trade war begins
There will be no winners in this worsening conflict

An unprecedented trade war has begun, with U.S. tariffs on $34 billion in Chinese imports taking effect Friday. The move prompted China to retaliate the same way.

The tit-for-tat battle no doubt reflects U.S. President Donald Trump's "America first" policy. Trump has initiated the silent war to rectify the snowballing U.S. trade deficit with China, which hit a record $375.2 billion last year.

The dispute does not necessarily come as a surprise because Trump hinted at a possible trade war with China during his campaign in 2016. He has also vowed to bring back jobs to the U.S. and to protect the interests of Americans under the name of fair trade. So the ongoing trade war is the culmination of Trump's trade protectionism.

What is more worrisome is that the tariff imposition is only the start of the trade war, not the end of it. Trump has even threatened to target more than $500 billion worth of Chinese goods. This figure is almost the total sum the U.S. imported from China in 2017. If his threat becomes a reality, the U.S.-China conflict could turn into an all-out trade war.

Beijing is also taking a hard-line stance, vowing never to surrender to Washington as far as the trade issue is concerned. This position is evident in a statement issued by China's Commerce Ministry. The statement reads, "China promised not to fire the first shot, but to defend national core interests and the interests of the people it has no choice but to strike back as necessary."

Judging from developments between the world's two largest economies, the trade row is more likely to get worse and worse with no quick fix in sight. This is all the more so at least until the November midterm elections in the U.S. Trump apparently needs the escalation of the trade war in a desperate bid to win the polls.

China's Xi Jinping leadership also shows little sign of taking a step backward. Rather, it intends to take the showdown with the U.S. as an opportunity to speed up its "Made in China 2025" initiative to transform the so-called "world's factory" into a tech-based advanced industrial power.

In this context, the trade face-off smacks of a struggle between the G2 countries for economic hegemony over the global market. This explains why the U.S. has imposed 25 percent tariffs on Chinese imports such as machinery, electronics and high tech equipment including cars, computer hard drives and LEDs.
Simply put, the Trump administration is apparently trying to hold China in check to prevent the Middle Kingdom from catching up with the U.S. in high tech industrial fields. Whatever the reasons, the two countries are on a head-on clash to vie for economic and industrial dominance over each other.

But it is wrong for Trump to disregard the spirit of free trade that has buttressed the global economy since World War II. He and his administration should realize that there will be no winners in this trade war.
(END)

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