The Rise and Fall of American Industries

A Different Type of War

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The Rise and Fall of American Industries

Devon Smith, Reporter

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New railroads, ports, and roads appear in key locations in the Middle East and Asia. All of this infrastructure leads back to one country: China. It’s all part of the most ambitious, modern economic plan in history; the Belt and Road Initiative.

The Belt and Road Initiative is essentially a revamped Silk Road. The ancient Silk Road was a series of trade routes connecting China to the rest of Asia, the Middle East, and Eastern Europe during 206 BC to 220 AD.

These trade routes were named the Silk Road because of the large amounts of Chinese silk that flowed through them. But if China successfully completes this modern Silk Road, it won’t be silk that China is trading.

Most notably, China exports cotton. As China’s main cash crop, it produces over 5,987 tons of cotton every year. The Belt and Road Initiative would allow China to export their cotton on a much larger scale and more efficiently than ever before.

China is a country of industry. Many western countries outsource their production to China. In order to have the ability to make so many raw and finished products, China requires a large amount of oil.

China imports over $116.2 billion worth of mineral fuels, including oil, each year. The Belt and Road initiative will not only make exports more profitable, but imports cheaper.

If China is able to complete and maintain the trade routes within The Belt and Road initiative spanning three continents, it will lead to an economic boom of which the East has never seen before, and possibly put China in position to be the world’s next superpower.

The United State’s Response

“Trade wars are good and easy to win.” Trump’s overconfidence oozes through the screens of smartphones all over the world. For many, this tweet reassures them of his capability to handle the delicate world of global trade. However, Trump has many reasons to be worried.

His answer to many of the pressures of the trade war are tariffs. These tariffs are focused on Chinese goods being exported to the United States.

Although these tariffs are beneficial for a few American industries, such as the aluminum industry, it negatively affects more industries than it helps.

If these tariffs don’t succeed in pressuring China into further opening their markets to American exports, then the United State’s economy could face serious consequences.

Saving Aluminum At What Cost?

The main reason that the Trump Administration has engaged in the trade war is to fulfill their campaign promise of bringing back American jobs.

Since implementing these tariffs, American aluminum has boomed, with many aluminum companies building new factories and rehiring workers that they previously couldn’t afford to pay.

Because American aluminum is now based in America, it has become more expensive for other industries that require aluminum. These other industries have needed to lay off workers in order to compensate for higher aluminum prices.

While these tariffs have saved some jobs, they have destroyed many more.

Third Parties

The economies of the United States and China aren’t the only ones being affected by the trade war.

The world is already facing large consequences. For example, the Centre for Economics and Business Research located in London found that Trump’s tariffs have already cost the UK $2.48 billion more for UK exports.

Unfortunately, the UK isn’t the only victim of these tariffs.

China is the lead global manufacturer, meaning that all countries who outsource their production to China will face the reality of Trump’s tariffs.    

Two Outcomes

Winning the trade war looks different to China and the United States.

For the United States to win the trade war, they need China to further open their markets for American exports.

For China to win the trade war, they need the United States to drastically lower the tariffs that have been placed on Chinese exports.

China has the upper hand. With global trade slowly shifting back towards the East, and many countries backing China’s Belt and Road initiative, winning or even drawing in a trade war with China becomes more unlikely everyday.