"Trade Stops": Ex-Trump Official Warns of Miscalculations in China Trade War
The trade war between the United States and China is escalating rapidly, raising concerns about potential economic fallout and miscalculations. According to Nazak Nikakhtar, a former Commerce Department official, the high tariffs imposed by both countries could effectively lead to "trade stops," with significant consequences for businesses and the global economy.
Nikakhtar, who now chairs the national security practice at law firm Wiley, highlighted the vulnerability of the tech industry to Beijing's retaliation. Companies like Apple and Nvidia, which rely on manufacturing in China or sales to the Chinese market, could face immense pressure from the Chinese government.
"Any company that does business in the United States is going to be leveraged by the Chinese government," Nikakhtar said. "The Chinese government is going to threaten them unless they use their influence on the U.S. government to walk the U.S. government back, or it’s just going to go after them directly so that those companies are going to have no choice but to advocate to the U.S. government."
While President Trump has expressed openness to negotiating with China, Nikakhtar believes that Chinese President Xi Jinping may not be interested in a deal. According to her, Xi has consolidated power, developed indigenous high-tech capabilities, and may feel less dependent on the American economy than previously thought.
"He pretty much knows something we don’t know, which is they don’t really need the American economy as much as we think that they do," Nikakhtar stated.
The expert suggests that Trump may be overestimating his position in this trade war. The American economy's sensitivity to even short-term economic pain could limit his leverage. While China also faces challenges, such as the potential for other countries to turn away, Xi Jinping may be less concerned about these factors than Trump.
"Trump is going to care a little bit more than Xi Jinping does and really does want a deal. But he’s going to want a deal on his terms and he’s going to want a deal from his position of power, and Xi Jinping is not going to give it to him," Nikakhtar concluded.
The escalating trade war between the U.S. and China carries significant risks for businesses and the global economy. As both countries dig in their heels, the potential for miscalculations and unintended consequences grows, making careful navigation essential to mitigate the potential fallout.