Trump thinks China is already waging a trade war
Trump believes that the US has gotten the short end of the stick from Globalization and the loss of 77,000 factories. He blames China for stealing these jobs through currency manipulation, unfair trade practices, and asymmetric market access. Warnings to Trump about dangers of starting a trade war with China are going to fall on deaf ears because he already believes that China has been waging a one-way trade war with the US. And if Trump believes that the US is under attack by China, then the war has already started. So with the appointment of Peter Navarro — an UC Irving economist who has called the Chinese government despicable, parasitic brutal callous amoral ruthless — as his new trade tsar, Trump in characteristic fashion has cast the US as a victim of China and he sees it as his duty to retaliate. And retaliate he will.
Globalist suggest the US has been an outsized beneficiary of globalization, and that while jobs have been lost in some areas they were gained in others — like how agriculture jobs were replaced by manufacturing and service jobs. For Trump and his supporters, that’s not good enough answer. Indeed, the biggest beneficiaries of globalization have been the elites: the well educated, the big cities, the global corporations, and the blue states. The biggest losers of globalization have been Trump’s supporters: the poorly educated, the small cities and rural areas, the family businesses, and the red states.
This distinction demographic between the winners and losers of globalization is important, because the backlash from a trade war with China will mostly impact the elites rather than Trump’s supporters, and here Trump may be more than willing to accept collateral damage if in turn he can bring manufacturing jobs back to middle America US.
Take Boeing for example, which aim to sell China over $1 trillion in planes over the next 20 years, and so naturally would be an soft target for China. But who is this really going to hurt? Nearly 60% of Boeing’s employees are in Washington D.C and California alone; and in places like Missouri, a state which Trump won, most of Boeing’s 15,000 employees are based in St Louis, which voted for Clinton.
In a trade war Apple is another potential retaliatory target for China. However, most of Apple’s high paying jobs are in Cupertino and most Apple stores are in urban centers which tend to vote Democrat even in red states. If Apple is impacted by retaliation, Trump supporters won’t feel the pain as much as Clinton supporters.
Clearly the large US companies most vulnerable to retaliation by the CCP are exactly those companies that benefited most from globalization. These companies are headquartered and operate in coastal cities, blue-districts, and urban centers. Again, Trump supporters won’t feel the pain as much as Clinton supporters.
And so here is the grand bargain. Trump is going to fight a trade war with China, one that he believes China is already waging, and his supporters stand to benefit at the expense on those who voted against him. In effect, Trump would be willing to trade 20,000 jobs at Boeing and Apple which pay $75,000/year, for 200 new factories each employing 100 workers at $40,000/year. And because the cost of living would be lower in the areas seeing economic improvement, these may actually feel like $100,000 jobs in places like Washington DC or Cupertino. For Trump and his supporters this would be a win and it may even help alleviate income equality.
So make no mistake a trade war is coming.
