US President Donald Trump on Thursday announced a $16 billion aid package for farmers to offset their losses from the trade war with China. He said the package "will be paid for by the billions of dollars" from tariffs on Chinese imports.
The US started to provide farmers with subsidies in 2018. But feedback from US farmers is not encouraging, with most US ranchers wanting market access, not subsidies. Although the US government insists that the tariffs hike will be paid by China, an IMF report issued on Thursday said, "Tariff revenue collected has been borne almost entirely by US importers."
It is odd to see a country's large swathes of land left idle, its crops unsold and many of its farmers only making a living through government relief. Low tariffs have shaped the functioning economic model of modern countries. When the US slaps tariffs on other nation's products, leaving its citizens no choice but to purchase more expensive goods, it will inevitably lead to chaos in interest distribution.
The US believes that raising tariffs is a good option when no agreement can be reached with China. But by doing so, Washington is biting off more than it can chew. The trade war will only result in a lose-lose outcome.
An increasing number of signs show the China-US trade war will turn out to be a protracted war. Washington, which reached the current situation through sheer bravado, is starting to panic. It is gambling by imposing restrictions on Chinese companies like Huawei, hoping to crush China's will. But China will not yield. Chinese society is swiftly mobilizing to unite against US pressure and a possible long-term trade war.
To defend China's economic sovereignty, it is worth bearing some short-term pain. The process will stimulate the country to make more breakthroughs in key technology fields and make China stronger.
The continued escalation of the trade war will also impact the global supply chain, resulting in painful adjustments. The US is the trouble maker of all this. Countries will respond to the trade war based on their national interests, but two universal understandings will be formed unfavorable to the US.
First, countries will have a more profound assessment on US bullying. If Washington can play hardball with a strong China, it will more likely coerce other small and medium countries and force them to submit. Second, leading companies worldwide might realize that US enterprises' stable cooperation with them comes at a price - they must be obedient to the US.
The cruel fact that the US would resort to anything to bring its rivals to its knees will be remembered by most people and powers across the world.