1.1 Thanos and Trump
Beware readers, spoiler alert ahead.
On June 20, 2018, I came across an interesting headline, âAvengers star Josh Brolin explains how Trump is similar to his âInfinity Warâ villain Thanos,â on an online business magazine.1 In his interview with Stephen Colbert, Brolin hilariously read Trump's tweet in Thanos's tone. The Hollywood star, whose character erased half of the galaxy's population to fulfill his own political belief, said Trump's public policies were akin to what Thanos did in the Marvel trilogy. His own planet, Titan, ran out of resources due to overpopulation. In response, Thanos thought the resource imbalance problem facing the universe could be addressed through massacring half of the creatures. He was addressing an economic problem. He tried to search for an equilibrium, and he called it âbalance.â âWhen I'm done, half of humanity will still exist. Perfectly balanced, as all things should be.â
What was Thanos's plan? The Avengers villain offered âa peaceful wayâ to finish people's lives painlessly and indiscriminately. He collected six Infinity Stones, snapped his fingers, and turned many superheroes into ashesâa very sad ending, surprising the audience that walked out of the cinema. Handling the Infinity Stones was not an easy task. The gems were full of gamma rays. Anyone who held the stones needed a strong will to do so. Thanos believed he was the chosen one to fulfill his âdestiny.â He said, âI'm the only one who knows that. At least I'm the only who has the will to act on it.â He even sacrificed his beloved daughter Gamora in exchange for the soul stone. âThe hardest choice requires the strongest will.â Do Thanos's words sound like a president who claimed he was the designated one to lead his country to greatness again?
Donald Trump thought flagging a trade war could restore the trade balance of the US. He could order his administration to severely penalize China. Lifting import tariff rates from 0% to 25% on Chinese goods in a flash caught the world off guard. Half a million factory workers were affected. China was labeled a currency manipulator even though every-one knew the country actually wanted a stronger rather than weaker currency. Trump's trade measures hurt many American companies and US consumers. But he did not care. He had a strong will like Thanos and he decisively went his own way. âWe reject globalism and embrace the doctrine of patriotism,â he said, delivering his second address to the United Nations in November 2018.2
At the same time, there are still believers in free trade. Germany, Canada, Mexico, Korea, Japan, and other countries have risen to prosperity in the past few decades. They prefer globalization of some sort. The G20 Summit in Hamburg 2017 issued a heroic declaration to defend the prevailing international arrangement: âGlobalization and technological change have contributed significantly to driving economic growth and raising living standards across the globe. However, the gains from globalization have not been shared widely enough. By bringing together developed and emerging market economies, the G20 is determined to shape globalization to benefit all people. Most importantly, we need to better enable our people to seize its opportunities.â3
China was the top winner in globalization. In 1979, the Middle Kingdom decided to open up, fueling the world with a massive supply of labor. After 40 years of strong growth, the country became the production line for the world, receiving orders from the US, Japan, and Europe. Its ability for mass production was unchallengeable. The quality and technological content of Chinese products improved rapidly in the past few years. It began to develop its own brand. China became a prime target of Trump's new trade policy.
Meanwhile, China was also faced with many structural economic issues, namely a notably aging population and debt pileup. President Xi Jinping saw the urgency to upgrade the economy. He wanted China to become a tech-driven economy by the middle of this century. His âChina Dreamâ was seen as a threat to the Western-centric world. Xi vowed to bring prosperity to Eurasia via his Belt and Road campaign. He played as a champion for globalization. He wanted more countries to use the renminbi (RMB). Perhaps Trump thought if he didn't stop China now, it would be too late. Maybe the trade war was meant to safeguard the global dominance of the US. Whatever his initial motivation, the battle has begun. A new economic order is evolving.
This chapter reviews the causes, the impact, and the outlook of the trade war. In Section 1.2, I discuss several possible reasons for the trade war. Trump's policy stance clearly showed a discontent with globalization. All the disputes he created with other countries pointed to a rising era of unilateralism and neo-nationalism. Since China represented almost two-thirds of the US total trade imbalance, treating China harshly was tactical. The US was frustrated with China's track record of intellectual property rights and forced technology transfer. This seemed to offer a legitimate reason for the US to act. However, underlying the trade tension appeared to be a rivalry between the China Dream and America First. China threat theory has become increasingly popular under the current political climate.4 In a nutshell, the trade war is not an issue of trade imbalance.
Section 1.3 identifies the features of this conflict. Compared with other trade disputes, this USâChina trade war is unconventional. An import tariff only serves as an appetizer but is not the main course itself. The US administration clearly understands how globalization works and decides to attack the global supply chains. Prohibiting US companies from business transactions with some Chinese companies can paralyze their production line. China can also retaliate by limiting the supply of rare earth. The tit-for-tat actions of both countries are strategic, calculative, and in...