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Would Donald Trump Start a China-US Trade War 2.0?

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Trans-Pacific View | Politics

Would Donald Trump Start a China-US Trade War 2.0?

Even if Trump could somehow weather the economic repercussions of another trade war, the broader political consequences for the Republican Party would likely be insurmountable.

Would Donald Trump Start a China-US Trade War 2.0?
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Donald Trump is close to securing the 2024 Republican presidential nomination after a winning streak in early GOP primaries. To take it up a notch, the former U.S. president wants his mounting clout to be felt not only by his challengers within the country, but also by the United States’ biggest international competitor: China. To that end, he claimed China’s recent stock market crash was a response to his victory in the Iowa caucus, despite the lack of any evidence to prove such a correlation.

Will Trump’s comeback bring a tougher policy on China? It is possible. Considering Trump’s track record of confronting China and his persistent anti-China rhetoric during his campaign, his high-key return to the spotlight of U.S. politics – and potentially, to the White House – is starting to spark speculation about the reversal of the Biden-led détente between the United States and China. One widely discussed scenario is the initiation of a second trade war

However, a closer examination of the aftermath of the first trade war and its political ramifications within the Republican Party would lead to a different perspective.

It is ironic that Trump, generally characterized as an isolationist, never shies away from weaponizing trade policy. Despite his boast about the trade war’s benefits for the United States, though, it actually did more harm than good to the U.S. economy. Contrary to Trump’s intentions, the high tariffs on Chinese goods neither boosted U.S. manufacturing nor reduced the trade deficit with China. Instead, U.S. firms and consumers bore the brunt of tariffs on Chinese imports, leading to higher costs for businesses and a huge decline in U.S. products’ international competitiveness. 

To make matters worse, China suspended its purchases of U.S. agricultural products and imposed retaliatory tariffs on U.S. imports, exacerbating the challenges faced by U.S. firms in downstream industries. For all intents and purposes, the trade war proved to be a resounding economic failure for the United States, causing an estimated annual net loss of $16 billion to the U.S. economy.

If a 25 percent tariff on imports from China already wrought such havoc on the U.S. economy, it is highly improbable that Trump would genuinely consider imposing a 60 percent tariff, as recently reported by the Washington Post. Even if Trump could somehow weather the economic repercussions of another trade war, the broader political consequences for the Republican Party would likely be insurmountable.

The most direct political impact on the GOP was exhibited by the results of the 2018 midterm elections, which occurred several months after the trade war. Whereas Trump attributed the loss of many GOP candidates to their failure to embrace him, studies have pointed out a different causation: The Republican House candidates lost vote share in counties where employment heavily relied on manufacturing and agricultural products affected by China’s retaliatory tariffs. This impact was especially pronounced in “swing” counties, where the election outcome had been closely contested during the 2016 presidential election.

While Trump has never acknowledged the negative political repercussions of his tariff policy toward China, his actions say otherwise. The most prominent example is his initiation of a large-scale bailout program aimed at subsidizing farmers, a group directly affected by the trade war and a key component of his voter base. Nevertheless, not only did the bailout program substantially worsen the government deficit, but it offered little electoral help to Republican candidates. 

Despite polling indicating continued support for Trump among a considerable proportion of farmers leading up to the 2024 election, empirical evidence reveals that their verbal support for Trump does not necessarily translate into voting support for the Republican Party. Take Iowa, one of the regions hardest-hit during the trade war, for example: Many Republican farmers there have expressed unwavering support for Trump for his reelection, even in the face of potential trade conflicts with China. However, the 2018 midterm elections saw the GOP lose two congressional seats to the Democrats, resulting in the latter becoming the majority in the state. 

Thus, the cost of another trade war with China is evidently more pronounced for GOP politicians from farm states than for Trump himself. Nearly a year ago, many rural Republicans already rejected Trump’s proposals to slap new tariffs on Chinese imports. Even within the House China Select Committee, where China hawks predominate, heated debates about the prospect of another trade war have never ceased, with concerned Republicans discreetly aligning with several Democrats in opposing such a possibility.

Considering Trump’s current sway over the GOP, a swath of Republican lawmakers are still reluctant to publicly criticize him. However, if faced with a choice between their own political careers and blindly following Trump, it is anticipated that many would prioritize their own interests over the former president. Historical precedents support this notion: In 2000, three out of four Republicans voted in favor of Bill Clinton’s decision to grant Beijing permanent normal trading privileges, demonstrating a willingness to break ranks when they believed it would serve the best interests of their constituencies – even just months before a presidential election.

While Trump is gaining stronger momentum among his supporters than in 2016 and 2020, a parallel anti-Trump force is also on the rise, both within and outside the GOP. Trump may not truly care about the victims of the trade war as he claims to do, but there is no way he could completely ignore the voices of rank-and-file Republican lawmakers. As Trump-backed candidates did not fare well in the 2022 midterm elections, he should have realized by now that if he does not wish to be a lame duck during a potential second term, he has to make a breakthrough on the razor-thin margin that House Republicans currently hold in 2024 and beyond. 

With the ousting of their former House speaker, any rational Republican would prioritize stability over uncertainty at this juncture. Initiating another trade war with China would likely sow further discord within the already-divided GOP, exacerbating divisions rather than fostering unity. 

Since the Biden administration has maintained most of Trump’s tariffs on China, the former president will continue to tout the idea of a trade war 2.0 in the lead-up to the general election, emphasizing his greater determination to counter China than his Democratic counterpart. Nevertheless, if the lessons of the previous three elections have taught Trump anything, it is that he and his party are the ones ultimately paying the political price of the trade war. And the significant rejection from within the GOP is becoming a formidable deterrent to his pursuit of such an agenda.