Trade protectionism will ultimately hurt US interests: white paper

BEIJING - Trade protectionism will ultimately hurt US interests, according to a white paper released Monday by the Information Office of the State Council, titled "The Facts and China's Position on China-US Trade Friction."

"Thanks to economic globalization, economies, particularly the larger ones, are highly interdependent. Ultimately, trade wars unilaterally initiated by the US administration will not only hurt other economies but also undermine US interests," the white paper said.

The white paper said trade protectionism will push up manufacturing costs and affect American jobs. It cited a report by the Peterson Institute for International Economics (PIIE) which contended that since 95 percent of the Chinese products hit by higher tariffs are parts and electronic components used in end products made in the United States, raising tariffs on these Chinese products will only damage US businesses.

"The PIIE also projected that raising tariffs on imported automobiles would cause 195,000 US workers to lose their jobs. If other countries retaliate in kind, 624,000 US jobs would be lost," the white paper said.

According to the white paper, trade protectionism will drive up prices in the United States and harm consumers.

"Consumer goods account for a considerable share in the US imports from China," the white paper said. "The figure (excluding food and automobiles) stood at 46.6 percent in 2017, according to the Bureau of Economic Analysis of the US Department of Commerce. For many years, the import of inexpensive yet quality products from China has been key to low inflation in the United States."

The US National Taxpayers Union warned in an open letter to Congress and President Donald Trump on May 3, 2018 that higher protective duties would increase the prices which domestic consumers would have to pay and few people could hope to gain from such a change, according to the white paper.

Trade protectionism triggers countermeasures from trading partners and will in turn hurt the US economy, the white paper said.

"The trade war waged by the US administration against China and many other important trading partners has led to countermeasures, and will cause huge losses to some regions, industries and firms in the United States," the white paper said.

As of the end of July 2018, major US trading partners including China, Canada, Mexico, Russia, the European Union (EU) and Turkey had all announced countermeasures against US trade protectionism, and had filed lawsuits at the World Trade Organization, according to the white paper.

Trade protectionism also erodes investors' confidence in the American economic environment and results in less net foreign direct investment (FDI) into the United States, the white paper said.

"As the trade friction escalates, companies feel less confident and more hesitant about investment," the white paper said.

According to the white paper, Adam Posen, President of the PIIE, argued that beyond the cost of the trade war, the US government's policy of "economic nationalism" has taken a toll in another important sphere: net inward investment into the United States by multinational corporations -- both foreign and American -- has fallen almost to zero.