So far, the damage from tariffs and retaliation has been relatively small. But that could soon change.
On President Richard Nixon’s groundbreaking trip to China in 1972, Chinese Premier Zhou Enlai famously said it was “too early to say” whether the French Revolution was a success. This was seen as synonymous with China’s “sage, patient, and far-sighted ways.”
Unfortunately, although the quote continues to be widely used, it’s used inaccurately. As the newsroom joke goes, “That story is too good to check.”
In fact, Zhou was referring to the student uprisings in France four years earlier — 1968, not the events of 1789.
One lesson is that China is no more inclined to be patient than any other nation when its interests are at stake.
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This brings us to the current trade conflict between the United States and China, begun with tariffs on Chinese imports by the Trump administration and retaliation by Beijing.
How is the retreat into protectionism affecting Washington, America’s most trade dependent/vulnerable state, whose No. 1 export customer is China?
It is too early to say.
Overall merchandise exports from Washington totaled $49.2 billion through August globally, slightly ahead of where they stood at the same period in 2017.
But exports to China fell to slightly more than $9 billion, compared with $10.2 billion in August of last year. Aircraft, cereals, wood, fruits and vehicles saw the biggest declines, according to data from WiserTrade. Washington agricultural products are among the targets of Beijing’s tit-for-tat tariffs.
On the other hand, The Northwest Seaport Alliance, the joint venture of the ports of Seattle and Tacoma, posted its strongest September cargo numbers since 2005. Part of that was a fluke of bad weather that delayed vessels that would have called in August.
Still, smaller ports that depend on farm exports don’t have it so good. The Pacific Merchant Shipping Association reported, “China’s retaliatory tariff on U.S. soybeans will hit ports like Kalama, Longview, and Vancouver (Washington) hard during a shipping season that normally starts in August or September, peaks in October and November, and then tails off into early the next spring.”
Admittedly, soybeans are small, er, potatoes for Washington. Apples, the state’s top crop, are not — they’re on the Chinese hit list, too.
A Brookings Institution analysis shows that the Chinese duties so far have been mostly aimed at Trump-supporting states. For example, Idaho, Montana, Nebraska and South Dakota have the largest number of jobs in danger from the retaliatory tariffs. Washington ranks 31st most at risk. So far.
The last chance to avert an escalation into a full-blown trade war may come next month, when President Trump is scheduled to meet with Chinese President Xi Jinping at the G-20 summit. Without a breakthrough, the administration is planning a new round of tariffs, which will no doubt be met by further retaliation from Beijing.
So far, airliners haven’t been on China’s list. Boeing hopes to sell 7,690 planes there over the next two decades. But this happy scenario is not guaranteed, and a Chinese tilt away from Boeing would rock the Puget Sound region.
Many American businesses aren’t optimistic. Reuters reported on a survey of 219 U.S. firms operating in southern China, with 70 percent saying they would delay new investments there or shift production to other nations if the trade situation worsens. Only 1 percent would move work back to the United States.
Indeed, while it’s too early to say, U.S. manufacturing employment remains at historically low levels (around 12.7 million in September).
Regular readers here know that I grant Trump has a point about technology transfer, theft and malicious semiconductors embedded in Chinese products.
But tariffs are a blunt and dangerous instrument — the Smoot-Hawley tariff made the Great Depression worse. And a critical element that exposed America to this mischief isn’t addressed by the administration: Greed by American companies that offshored manufacturing and were willing to pay any price to gain admittance to the Chinese market.
Once again, the best response to China from an economic standpoint was President Obama’s signature trade initiative, the Trans-Pacific Partnership, a high-standard trade agreement among our allies. But that’s gone under Trump.
• The Center for Entrepreneurship produced a new report, “The Rise of the Global Startup City.” Seattle ranks a decent No. 15 among 300 metropolitan areas. But the most important thrust from this survey is that America is losing its edge in venture capital and startup activity.
• In case you missed it, Forbes named our “blue-city socialist hellhole” the best place for business and careers in America. “Yes, business and living costs are high, but the talented workforce more than compensates and helps Seattle land the top spot.” Portland ranks third and Tacoma tenth.