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Steve Levy: Trump should ask G-7 allies to join US in fighting China’s trade abuses

Steve Levy: Trump should ask G-7 allies to join US in fighting China’s trade abuses


Steve Levy: Trump should ask G-7 allies to join US in fighting China’s trade abuses

President Trump was right to call on U.S. companies Friday to begin looking for ways to gradually reduce their business ties and trade with China. He should make the same call to our allies at the Group of Seven summit now underway in France.

“Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA,” Trump tweeted Friday. He also slapped new tariffs on products imported from China.

OK, the president probably doesn’t have the power to order U.S. companies to divest from China, but his call makes sense and he can be quite persuasive. A reasonable transition period is necessary, but Trump has drawn a line in the sand. It’s about time someone had the guts to do it.


Leaders of our allies now meeting with President Trump at the G-7 summit – Britain, Canada, France, Germany, Italy and Japan – should make the same call to their own businesses. So should our other allies around the world.

A united move like this by many nations around the world to limit trading with China would put enormous pressure on that nation’s leaders to start playing by the rules of international trade. If China started doing this, normal trading relations could resume. If China refused to change its ways, trade and normal business relations would remain suspended.

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The U.S. can increase trade with other nations to replace trade with China. And if American companies follow President Trump’s advice and bring many of their factories and the jobs that come with them back to the U.S. from China, it would give our economy a big boost and increase tax revenue for all levels of government.

While higher labor costs and red tape in the U.S. have caused American companies to find cheaper means of production elsewhere, the Trump administration and the Republican Congress have already lowered taxes, and the administration has cut government regulations. These actions make it more inviting for American companies to do business in the U.S. Further incentives could be added to lure American companies to move jobs back home and out of China.

Gradually gravitating away from trade and business dealings with China would not be the disaster that some Trump critics make it out to be. Trade between the U.S. and China was illegal from 1950 to 1970, following the Communist Party takeover of China in 1949 and the outbreak of the Korean War in 1950, when U.S. and Chinese troops battled each other.

The Trump administration should negotiate a new international trade agreement to create an open market for our friends, while collectively punishing – via tariffs and other means – totalitarian regimes like China that act as criminal enterprises.

President Richard Nixon restored trade and diplomatic relations between our two nations. But during the two decades when our two countries didn’t do business with each other, America did just fine economically. In fact, the restoration of trade and diplomatic relations is what sparked an exodus of U.S. jobs and manufacturing to China.

Give credit to President Trump for calling out the Chinese government for what it is – a criminal enterprise that has fleeced America of jobs and technology. Past presidents were unwilling to stand up to China and refuse to accept its hypocrisy and double standards when it comes to trade. They feared rocking the boat might cause short-term problems for U.S. exports, retail prices and the stock market.

American businesses were willing to make deals with the devil to gain a foothold in the world’s largest untapped market. For example, Google was even willing to submit to censorship in order to avoid being shut out of China.

U.S. and other foreign companies were – and still are –willing to surrender to the Beijing’s demands to allow China to become a part-owner of their business and to require the business to manufacture products sold in China at facilities in China. Because of this requirement, many companies shipped jobs to China instead of shipping U.S.-made products.

For decades, so-called “free traders” would claim that any attempt to clamp down on China’s trade abuses was tantamount to violating the very core of economist Adam Smith’s teachings. Yet, as Trump points out, there is nothing “free” about the way the Chinese play the game.

There is no reason why this once backward dictatorship should now be cleaning our clock. It has been doing so over the last two decades because past presidents have accepted and even encouraged its misconduct.

The Chinese are polite and diplomatic in their dealings with the U.S. government and businesses. But their actions indicate that they understand we are their economic adversary today, and potentially their military adversary in the future.

Past U.S. administrations have talked politely back to China, but have been afraid to strategically act with the realization that China is indeed our economic adversary. Either it was politically incorrect to do so, or we feared the Chinese would ban us from their markets while allowing other economic rivals to fill the void.

If the U.S. and our allies form a united front and pivot more investment to India, Vietnam and other friendly countries in the developing world, we could reap the benefits of globalization without having our technology stolen or our exports blocked in these markets.

India is a democracy with an educated population and skilled workforce and is friendly toward America. It is a non-aggressive nation with no intentions of dominating its neighbors, as China seeks to do.

India’s labor costs are lower than China’s. Importantly, U.S. companies would be able to set up shop there without having to forfeit 50 percent ownership of their local operations to the government, as they are forced to do in China.

The Trump administration should negotiate a new international trade agreement to create an open market for our friends, while collectively punishing – via tariffs and other means – totalitarian regimes like China that act as criminal enterprises.

China’s gross domestic product of $12 trillion has grown remarkably over the past decades, but it is still dwarfed by the combination of the U.S. and European Union economies, which account for close to half of the world’s economic output. Restricting China from our markets would cripple it without firing a shot.

India certainly has its challenges, including subpar roads and electric grids, as well as much further shipping routes. Despite low wages, worker productivity is diminished because of government policies and a cultural aversion to mega facilities. And while India is a democracy, corruption remains a concern.


These drawbacks can be overcome if a master plan is developed and India – as well as other trading partners –knows that a far greater share of the Western world’s markets can be within their reach.

And where India cannot accommodate us, other growing nations – such as Singapore, Malaysia and Vietnam – can become stronger trading partners to further dilute China’s leverage.

China’s leaders need to be made to understand that they do not have a stranglehold on the U.S. economy. That is the point of President Trump’s call on U.S. companies to begin looking for alternatives to trading and doing business with China.


Ideally, Trump’s tweet calling for action by U.S. companies will be a wakeup call to China to play by the rules of international trade. Realistically, China won’t make needed concessions until the U.S. and other nations pressure it to do so.

Unlike his predecessors, Trump is unwilling to kick the can down the road and leave it to the next president, or the president after that, to deal with China’s many trade violations. All Americans should be grateful to our president for taking on this exceedingly difficult but very necessary and important assignment.


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