Could the China/America trade issue lead to a new Cold War?

 

 

For those of a certain age, or those just interested in world history, the Cold War is a fascinating and well-remembered subject. Occurring between the USA and Russia from around 1947 to 1991 officially, it saw both superpowers engaged in covert operations against one another. The eventual aim was to achieve a propaganda and intelligence victory that would see their political ideology accepted by the other.

 

Luckily for all involved, no actual fighting took place and the break-up of the Soviet Union around 1991 led to the Cold War ending. If you need more information on this fascinating period in history and how it has affected modern times, then the book ‘Putin’s World’ from Angela Stent is a must-read. This not only fills in how these two countries view each other but also how the arrival of Vladimir Putin has affected things in modern times.

 

However, many interested in world politics are now beginning to fear that the trade war spat between President Trump’s America and Xi Jinping’s China could signal a new Cold War era. This could be a disastrous move for the entire planet which could get dragged into the hostilities.

 

Trade war has sparked new fears

 

So, what has happened exactly between China and America lately to spark these fears of a new Cold War? It all started back in 2018 when President Donald Trump announced plans to finally deal with the USA’s concerns over what they saw as China’s unfair infringement on international trade rules through the World Trade Organization. This saw Trump put a raft of tariffs on Chinese goods coming into the USA.

 

Of course, this did not go down well with China who have risked losing a lot of business with the new tariffs in place. From China’s point of view, they have not infringed trade rules, violated intellectual property rights or stolen technology, as they have been accused of by the USA.

 

This trade war has rumbled on since then with each side accusing the other of being wrong or failing to be open to resolving the issue. The latest developments have seen the US raise the 10% tariff on $200 billion worth of Chinese goods to 25%. In return, China has announced that it plans to raise tariffs on $60 billion worth of US goods.

 

Is this the start of a new Cold War?

 

With relations becoming increasingly frosty between the two global powers and no sign of them thawing, it could well be on the cards. There are also the political differences to remember between the two also. China is still a communist country which puts it firmly in the Russian role compared to the capitalism of America. When you also add cultural differences into the mix and societies that may not understand each other that well, then a slip into Cold War 2.0 may happen.

 

But what specific reasons are there to think things will not improve soon in this trade war?

 

Both sides are poles apart

 

What the various rounds of fruitless negotiations have shown is how far apart both the US and China are. It seems that there are just some fundamental differences from each side that they just cannot come to agreement on. From the requirement for US companies to hand over intellectual property and tech to Chinese partners when doing business there to the way the US does not like the structure of the Chinese government, there are some big hurdles to overcome.

 

USA too aggressive  

 

Although the US may have a point in its concerns, the way it has conducted negotiations with China has not helped. This has left little incentive for China to make any of the requested changes or to be inclined to compromise on their own negotiating position. There is also the issue of tariffs that were already in place and will continue to be so for Chinese companies in the US, even after this trade war subsides. Unless the American government can offer China a sweetener, it seems talks will continue to stall.

 

Effects of tariffs themselves

 

This may sound strange, but the cumulative effect of the tariffs on America over time could prevent the trade war from ending. In simple terms, although tariffs will help boost US employment, it does so in such a way that costs the US consumer more. This is because they will have to pay higher prices for goods, compared to cheaper Chinese imports. As time goes by, more concessions will be needed from China to justify the costs, but these are unlikely to be agreed too. In the end, this could cause the trade war to be extended.

 

A new Cold War era awaits

 

Of course, the other factor to add into the equation is the two leaders involved. Both are seemingly unwilling to budge and be seen as the one to publicly lose this fight. This can be said especially of President Trump who seems determined to keep it going until he gets exactly what he wants. Whether an agreement will be reached before we descend into another Cold War remains to be seen. Much will depend on what happens in the future.

 

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