Locke: Who is winning the US vs China trade war?

Under the Trump administration, the United States is continuing its trade war with China. American companies and agricultural industries are hurting as a result of tariffs. But the hope with some is that China is hurting, too.

So who is winning so far?

“Nobody is winning,” said former Washington State Governor Gary Locke. “It’s losers, and it’s people on both sides. It’s Chinese companies, Chinese consumers, American companies, and definitely American consumers.”

Locke served as governor for two terms. Then he was Secretary of Commerce and ambassador to China under President Obama. He is now running Locke Global Strategies, and works with Davis Wright Tremaine LLP as an adviser and consultant on business between the U.S. and China.

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“Even the president’s own federal reserve has estimated that the cost of the tariffs on an average American household is about $1,000,” Locke told KIRO Radio’s Dave Ross. “And that’s just with the tariffs that are already in place, not counting the tariffs that are going to go up during the Christmas holidays that will impact your laptops, your toys, your iWatches and iPhones and everything else.”

“It’s only going to get worse unless we can reach a deal,” he added.

Locke notes that there are some fundamental problems with the way China does business; problems that do need to be addressed. He notes that China is trying to subsidize a lot of industries, counter to WTO rules. China is excluding foreign companies from doing certain types of business activity in its country, which hurts American companies, including ones in Washington state.

“Their policies have enabled them to grow and lift hundreds and hundreds of millions of people out of poverty and say ‘Hey, see, we were able to avoid the disastrous policies of the west and provide stable growth for our people and bring people into prosperity,’” Locke said. “So they feel their model is the right model. Getting them to change will not be easy. But they simply must reform.”

Solutions, however, are also not easy. Locke argues that most people agree on the problems posed by the Chinese economy and the country’s industrial policies. Whatever most people argue around solutions, Locke says that tariffs are a bad idea.

“When you impose tariffs, the other side will impose tariffs and each side keeps ratcheting up and it’s the consumers and the American companies that pay,” he said. “….we really should have been teaming up with all of our allies; countries from the EU and Korea and other places who have the same complaints about the trade and economic polices of China. And really impose restrictions on Chinese investment in the United States or into Europe, or elsewhere, the same way that they impose restrictions on our investment into China.”

The problem is that the United States has also imposed tariffs on its allies, too. Such as Canada, Germany, and others.

“There’s no incentive for them, quite frankly, to team up with us to address these problems that China has,” Locke said. “….We’ve burned a lot of bridges because we’ve slapped tariffs on German products, Canadian products, French products, you name it, coming into the United States.”

The factor that China has going for it is that it is a huge market, and that keeps companies sending products and services there. Despite that, however, American consumers will end up paying for it.

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