On Friday, the Trump administration is slated to unilaterally impose tariffs on $34 billion worth of Chinese goods. Trump has said additional tariffs on hundreds of billions in Chinese goods are in the pipeline, too. China has called unilateral action by the US Government as unfair and against the spirit of globalisation. China is likely to retaliate against the US Government actions. This trade war will not restrict to US–China but will spill over to other trading partners as well. The trade war between two nations is likely to hurt Europe, japan, South Asia and ASEAN. It may also impact India. Thus escalation would see both nations manoeuvring to build alliances against each other.
The US has given China a reason to build anti US trade alliance that may include Russia, some members of EU, ASEAN nations and Iran. Is it that Trump has given a platform to China to build a transregional trade alliance? Giving an adversary a chance to build an alliance is a bad strategy. President Trump may have handed over a geostrategic advantage to China to build an alliance that could bring Eurasia, South Asia and ASEAN countries together to fight protectionism. Has Trump given an opportunity to China to vigorously pursue Belt and Road Initiative and prepared ground to give China an opening to establish a toe hold in Europe.
At this juncture when China is rising, need of the hour was to isolate China and prevent drifting of your own allies towards China. But Trump has ensured that it is allowing not only adversaries to come together but also alienating favourably disposed nations such as Japan and India also to gravitate towards China at least on issues of environment and trade. Catherine Rampell has correctly assessed that Trump has also unwittingly given impetus to the 16-party Asian regional trade deal that would cover half the world’s economy. TPP that was being built as counter to China seems dead and US has practically abandoned it. Failure of TPP to take off is seen as a victory of China and it has weakened a potentially trade rival of China. Instead of abruptly starting a trade war with China the US should have first consolidated its partners and should have given definite direction to TPP and their relations with ASEAN and EU. In the overall scenario the US has allowed itself to be isolated in the long run.
The trade and tariff war should not only be seen from the perspective of trade and commerce but it may give China another platform to build an anti US alliance as counter to arbitrary sanctions and unfair trade practices against the spirit of global free trade. After the putting TPP in cold storage and not so friendly trade environment with Europe, President Trump may not be successful to build “trade coalition of the willing” against China due to unpredictable diplomatic and economic policies.