Here's some facts to make the point ...
China is second to the USA as the largest economy in the world! China's GDP is nearly 8x larger than Canada and 10x larger than Mexico. And yet, China imports less than 1/2 what these two trading partners import from the USA. The story is similar with other nations. Many of our other trading partners have a much more balanced trade relationship than China. Not that we don't have a right to want better deals with any of them!
Trump doesn't want to import less from China, he wants China to import more from the USA. Trump also expects China to be more fair about how it treats USA companies trying to do business in China. In addition, Trump wants better protection of USA intellectual property (patents, trademarks, etc.) which are being stolen and used to compete against their rightful owners in world markets. Fair and ethical practises includes reducing the extent to which China exploits workers and the environment in order to gain a competitive advantage over America and other Western countries.
Is Trump risking a trade war? YES. But all negotiations involve risk. One must be willing to risk in order to win. Trump is setting up negotiations. and he knows how important it is to be fearless in negotiations. The average American does not have a clue.
It's not an accident that Trump is saying things intended to scare Chinese leaders. But we shouldn't let Trump's tactics scare us. Understand that the media loves fear because it gets ratings! So the media loves to fan the flames of fear. And, Trump loves it when they do, because it plays right into his negotiating style!
Trump is able to negotiate a better deal for the USA because Trump knows he is negotiating from strength. The USA is China's number one market for exports - we make up nearly 16% of all their exports. And, whereas the health and stability of the Chinese economy and Communist political party is very dependent on exports to the USA, Chinese exports account for less than 1% of the USA GDP. In other words, while neither the USA or China want a trade war, the Chinese have more to lose!
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It is also important to understand that where one starts in negotiations is not typically where one ends up. Trump is starting out with reasonable demands and the USA stands to benefit substantially from any progress Trump makes in negotiations.
In the final analysis, the problem is not that the USA imports nearly $400 billion in goods from China. The problem is that China imports only about $100 billion from the USA. The Chinese don't have to lose - they just have to expand their economy and increase USA imports. If played right, Trump can succeed at the ultimate goal in negotiations for two parties that want to have a long term relationship - a WIN WIN!
