A trade war with China is a very bad idea | Yes, the U.S. has the larger consumer economy. No, that won’t be enough to avoid major (and majorly self-inflicted) pain [Derek Thompson]

> Like land wars in Asia, trade wars with China are, generally speaking, unadvisable. But if, for whatever reason, you were insistent on the idea, you’d want to follow two rules.

> First, find strength in numbers. China is an industrial juggernaut with more than 1 billion citizens. The U.S. is a finance-and-tech giant with fewer than 400 million people. To maximize success, the U.S. would have to assemble an Avengers team of trading partners across North America, Europe, and Asia. This would help keep our supply chains resilient if China cut off access to important products and materials, such as smartphone parts and processed lithium. What’s more, this so-called friend-shoring approach would squeeze China and hurt its ability to find alternative export markets, making retaliation less likely.

> Second, clarity is king. Reindustrialization—that is, building more factories and plants to make essential machines for AI, computing, energy, and national security—is expensive. To maximize domestic financing and even foreign investment, we’d want investors to understand that the tax and tariff rates we announce one Tuesday will hold up until the Tuesday after that, and the Tuesday after that, and even hundreds of Tuesdays stretching into the future. Nobody is going to break ground on a factory in Iowa based on a policy that they expect to disappear next Wednesday.

> I would not say the White House is “violating” these two rules. More precisely, I would say it is lighting the rules on fire and throwing the burning pages into the sky like confetti. Rather than deepen our relationships with overseas allies and Canada, we’ve announced high tariffs on the former and hinted at plans to subsume the latter. Rather than clearly laying out a tariff plan for the world, the administration has made a habit of announcing, then un-announcing, then re-announcing trade policies, like an older brother pretending to give candy to his sibling and yanking it away every five seconds.

> As far as I can tell, this is the state of America’s trade war with China. In February, the Trump administration imposed a 10 percent tariff on Chinese goods. In March, the new tariff was raised to 20 percent. In April, it rose again to 145 percent. After a few days, the administration clarified that many electronics parts made in China would be exempt from these new tariffs. A few hours later, it flop-flipped on the flip-flop and declared that no, actually, new tariffs on electronics were on the way, except nobody could say what those numbers would be (or how many times they, too, would be revised).

> This much seems clear: The Trump administration is executing its trade war with China with the same care and thoughtfulness with which it accidentally cut the Department of Energy’s Nuclear Security Administration, mistakenly offered buyouts to mission-critical workers in the Veterans Affairs office, and proposed sudden cuts to customer-service employees at the Social Security Administration. That is to say: with very little care and even less thoughtfulness.

> But unlike firing and unfiring a VA worker, which can happen in a matter of hours, unwinding the trade war with China seems unlikely to be a day’s work. China has responded to escalating tariffs by restricting exports on several metals that are processed almost exclusively in China. It has suspended exports of crucial materials used by America’s top manufacturers of cars, airplanes, military equipment, and computers.

> This is bad, bad news. “For certain product categories— smartphones, laptops, toys, lithium-ion batteries—it’s difficult to see how we quickly decouple from China, because China accounts for such a large share of our imports in those categories,” Jason Miller, a professor at Michigan State University and an expert on supply-chain management, told me.

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