Commentary: US should weigh up balance before trade tariff moves

BEIJING - The US administration's trade protectionism took in new moves recently, by the signing of controversial orders imposing a 25 percent levy on imported steel and a 10 percent charge on aluminum.

Since the beginning of 2018, the United States has slapped tariffs on solar panels and other products. It has also sought to reduce its trade deficit with China by $1 billion this year.

Trade includes goods and service trade. However, service trade is not fully reflected in the statistics. The US trade deficit version is overestimated by about 20 percent due to the calculation difference.

The trade imbalance is also attributed to US high technology controls towards China. The US-China trade deficit would be reduced by 35 percent if such controls were relaxed, Chinese Commerce Minister Zhong Shan cited a report by a US research institute as saying. Therefore, to solve the problem, the United States should make real efforts to relax the high-tech controls.

Another point should be kept in mind: although the trade surplus is in China, the United States still enjoys a larger benefit from it.

More than half of China's trade surplus comes from foreign-invested companies and processing trade, leaving little profit margins for China, while the lion's share of the profits from designing, component supplying and marketing go to the United States.

Taking all this into account, there is a general trade balance between the two countries.

In contrast to US trade protectionism, China is opening up with greater efforts by fully opening up its general manufacturing sector to foreign investors and loosening regulations in many areas, including green cars.

A trade war between the two countries would be a disaster, significantly affecting the United States.

According to a report by Washington D.C.-based Peterson Institute for International Economics, a trade war would make millions of Americans lose jobs.

Besides, restricting the import of products would weigh on US enterprises and people. It is clear who would be the biggest loser.

A trade war is never the right solution in a globalized world, as it would harm both the initiator and target country. In the event of a trade war, countries including China would make justified and necessary responses. Hopefully the United States will be wise enough to figure out a proper solution.