 |
| What direction will the US-China trade war take after 2024? (Source: Getty) |
As the world’s No. 1 and No. 2 economies, the United States and China have a long history of “strategic rivalry.” The trade boom between the two countries began in the 1990s, when Beijing became a major trading partner and a key destination for Washington’s investment.
This has created growing concerns in the US about trade imbalances and negative impacts on some local industries.
By the time President Donald Trump left office in early 2021, the US relationship with China had become even more strained. Despite negotiating and signing a phase one deal with China that addressed some of each country’s larger trade concerns, the Trump administration at the time took a hard line on national security issues involving Beijing.
This includes targeting Chinese telecommunications giant Huawei and concerns about the Northeast Asian nation’s influence on critical US infrastructure. Relations between the two countries have deteriorated further as the Covid-19 outbreak has intensified and President Trump has criticized Beijing’s handling of the pandemic.
In late January 2021, when he became the White House boss, although his language and behavior may have been less "combative" than Mr. Trump, President Biden adopted the same cautious approach as his predecessor in relations with China.
Biden has also worked since taking office to protect America’s geopolitical interests. Washington’s relationship with Beijing appears to be one of the few issues on which there is bipartisan unity in American politics.
Presidential elections are taking place across the United States in 2024, with Democratic (like incumbent President Biden) and Republican (like California Governor Ron DeSantis) candidates both taking a hard line on trade relations with China. So what direction will the US-China trade war take after 2024?
America under Biden: Must stop China
The fragile era of cooperation between the US and China appears to be coming to a standstill. The Biden administration is aggressively pursuing a strategy to curb Beijing’s dominance, especially in the technology industry, in a major break from US policy over the past 30 years.
To curb what Washington sees as Beijing's economic and political rise, Mr. Biden has implemented a “Protect and Promote” strategy.
To protect U.S. interests, a series of executive orders and rules are being implemented to slow China’s economic and technological development. Among these new measures is the so-called Foreign Direct Product Rule (FDPR). This supposedly “draconian” trade rule is intended to prevent chipmakers around the world from supplying advanced computer chips to China.
There was also an executive order creating federal authority to regulate US investments in China (the first time the federal government has had the ability to intervene in US industry) and a bipartisan agreement on investment screening steps into the Northeast Asian nation, as well as restrictions on the use of Chinese software and apps in the US (like Tik Tok).
Complementing these “protection” initiatives is Mr. Biden’s agenda to “boost” Washington’s competitiveness. This involves implementing policies and laws that promote U.S. economic growth, including reducing inflationary pressures and maintaining price stability in strategic high-tech sectors.
For example, the Creating Incentives to Make Semiconductors for America Act (also known as the CHIPS and Science Act) aims to strengthen the domestic semiconductor industry in the United States by providing financial incentives and grants to encourage domestic semiconductor manufacturing, research, and development. The legislation includes provisions for hundreds of billions of dollars in subsidies and tax credits to support the industry.
The CHIPS and Science Act is Washington's ambitious plan to return the country to its glory days, becoming a leader not only in technology inventions and patents, but also a leading semiconductor manufacturer in the next decade.
This law was signed into law by US President Joe Biden on August 9, 2022, and at that time, the size of the law was up to 280 billion USD, of which the part for semiconductor manufacturing alone was up to 39 billion USD.
While the high-tech industry is currently on the Biden administration’s target list, the policy also aims to extend the “Protect and Promote” strategy to other key sectors such as biotechnology and clean energy – two industries where the US does not want China to take the lead.
What will Ron DeSantis say?
Biden’s approach to trade and cooperation with China may seem tough, but there are those who want an even tougher stance on Beijing. California Governor Ron DeSantis, considered a “rising star” and a possible Republican presidential candidate, appears to be one of them.
 |
| Chinese telecommunications giant Huawei is a target in the US-China trade war. (Source: Quartz) |
The Florida state website states that Governor DeSantis signed three bills “…to counter Chinese influence in Florida.” This is a clear escalation of tensions and is reminiscent of the Cold War era.
As Governor of Florida, Mr. DeSantis has been very clear about his stance regarding relations with China. The three major pieces of legislation he has passed in Florida include:
Prohibits Chinese entities from purchasing agricultural land, land near schools or critical infrastructure, or land near military bases in Florida.
Prohibit any sensitive data from being stored on servers that are related to China in any way.
Eliminate all Chinese influence in the Florida education system by prohibiting employees of Florida educational institutions from accepting any gifts from Chinese entities.
Block access to apps he deems dangerous, such as Tik Tok, on any government or educational institution servers or devices.
Most recently, on July 9, Mr. DeSantis said he would withdraw permanent normal trade relations (PNTR - also known as most-favored nation status) with China if elected next year.
In terms of trade relations with the United States, only a few partners do not enjoy this status. Tariffs on imported goods from a country that enjoys PNTR status will be much lower than those on imported goods from a country that does not enjoy the status.
It is clear that Governor DeSantis sees China as a major threat to the United States, both economically and culturally. He has taken the idea of competition between the United States and China beyond simple trade agreements and turned it into an ideological war that affects every aspect of American life — from trade and education to the beliefs and lifestyles of the American people.
If the Republican governor of California wins next year's presidential election, relations with China will certainly be a key issue for him and efforts to cut trade between the two countries will be amplified.
However, it is likely that by 2024 the US will adopt increased measures to reduce trade volumes with China, especially in the high-tech sector (with other important sectors being affected).
Customs procedures are likely to become increasingly complex as both sides take steps to protect their own economies and promote local development. If Governor DeSantis is elected President of the United States, US-China tensions will certainly escalate significantly.
Source
Comment (0)