At the current stage of the tariff war, because the Trump team suspended the 90-day exemption period for high tariffs on other countries, but did not cancel the high tariffs on China, it was believed that it was only aimed at China. But in fact, this is the most embarrassing part of the Trump team in this round of tariff war. It hurt others and put itself in an extremely embarrassing situation.
What is embarrassing? It is very simple. If the tariff war is only aimed at China, the goal of blocking China's industrial chain will not be achieved at all. Because China's industrial chain has spread to countries all over the world, the reason why the Trump team wants to "go to war" with the world in this round of tariff war is to completely block the industrial chain from China. Otherwise, they will not be forced to "go to war" with the world.
However, if it "goes to war" with the world, all kinds of domestic markets and asset prices will face the risk of a cliff-like collapse, and it will have to temporarily postpone "going to war" with other countries. This will bring us back to the situation during his first term. China's industrial chain will still play a huge role in the world. Although there has been an outward shift of China's industrial chain, it has generally further stimulated the internationalization and expansion of China's industrial chain. Moreover, with the implementation of the overall 10% basic tariff in the United States, China's industrial chain advantages that have spread to the world will become more obvious, because only China's supply chain can withstand this tax rate (there is a lot of room for price increases after secondary processing), which will further stimulate the global supply chain's dependence on China.
Of course, this will definitely have an impact on China's entire domestic market, such as a direct reduction in orders from the United States, and a weakening of the competitiveness of products based solely on low labor costs. From another perspective, this is also a stimulus, that is, it has to develop in the direction of high-quality employment, high technology, high quality and high added value.
Many times, we have a misunderstanding that any major manufacturing country must eventually move towards producing specific products with high added value in order to become a manufacturing power. But in fact, this understanding is just a labeling statement. For China, no country can form an overall manufacturing supply chain scale advantage. "Good quality and low price" should become a permanent label for the entire Made in China. But this does not conflict with a specific enterprise or industry gradually moving towards high-end.
It's like saying that the world's largest supermarket is Walmart, and the key to Walmart's success, which has enabled it to dominate the world's retail market for so many years, is because it adheres to the "Everyday Low Price" policy. But at the same time, you can't say that Walmart's products are all of low quality and that it does not pursue higher quality.
For China's manufacturing industry, it is necessary to understand the relationship between base and upgrading. China is the world's manufacturing supply chain supermarket, and it has "everyday low prices" and "high quality and low prices". Under the background of this logic occupying about 80% of the overall base, China can also produce about 20% of high value-added products. This is similar to forming a stable structure that covers all low- and mid-end products (supply chain level) while intervening in some high-end products (specific brand products).
In the past, China's production of low-end and mid-end products was mainly based on specific products. In the future, as the tariff war progresses, it will exist more in the form of supply chains. These supply chains will support the global low-end and mid-end finished product market, which will form a bond with many developing countries and some large-scale manufacturing powerhouses, providing these countries with high-quality and low-cost parts and various service systems. As for the high-end part, on the one hand, it meets the domestic consumption upgrade, and on the other hand, based on high-tech and high-quality products, it has the advantages of scarcity and no substitutes and enters the international finished product market.
So what does this have to do with the tariff war? In fact, the United States quickly gave up the escalation of the global tariff war this time, which is the effect of this strategy, similar to surrounding the city with the countryside. When you want to block China's industrial chain at all costs, you will find that China's industrial chain has already penetrated the world and formed supply chain support for many countries in the world. If you want to destroy the supply chain of most countries in the world, you will be an enemy of almost all countries in the world.
Of course, for smaller countries, or countries that have historical dependence on and fear of the United States, it is actually necessary to understand these countries' self-selection, such as choosing not to retaliate against the US tariffs at the first time. But here, why I have been chatting that the EU as a whole actually has no chance to look forward to the past European and American relations, that is, history has long changed. The entire Trump team and support system in the United States now deny the European system and belief system from the perspective of historical and cultural beliefs. That is, Europe's race (immigration issues) and beliefs, as well as the indirect democratic system, are no longer the same as those of the United States (called Europe's "betrayal" by the United States).
At the same time, NATO is already dead in name only. In other words, if a country in Europe goes to war with a NATO country, will the United States resolutely send troops to protect the NATO country? Trump's team certainly won't, and this is just the beginning of a trend. From the perspective of the entire historical trend, the United States will no longer protect Europe. This is not just Trump's idea, but the idea of most American voters, and it is irreversible. This is even more reflected in the current Russia-Ukraine conflict.
If Europe still expects, based on history, culture and tradition, that the entire underlying system of the United States will continue to choose Europe as a long-term special ally, and expects another Biden administration to emerge in the future, then there may indeed be a huge misjudgment, because that will lead to the next round of more intense backlash. By then, there may be American leaders who are more intense than Trump and more angry with Europe. So everyone can see that the youngest cabinet members in Trump’s team, who are in their early 40s, are almost all dissatisfied with Europe (refer to Vance’s last speech in Europe, etc.).
Looking back at World War I and World War II, they were both brutal battles between European countries based on their own development, racial issues, religious issues, etc. No European country would seek peace from tradition, but instead they would look for dissatisfaction and excuses for war from tradition.
Europe's move towards peace started with the European Union, a new, purely secular economic organization that is not based on faith, race or tradition. Under the EU economic organization system, what holds everyone together is not religion, race or tradition, but purely secular economic and trade rules. This makes its consensus wider and can accommodate more systems. No matter what faith, country, ethnic system or traditional model you come from, as long as you meet and comply with the EU's economic and trade rules and various governance upgrade needs, you can join the EU. This avoids the irreconcilable low-end conflicts in Europe based on religion, race, tradition and other fields.
Therefore, the EU has had a relatively strong vitality since its establishment, gradually expanding its scale and evolving into further consensus and development systems such as the euro. Although the UK has left the EU, the impact on the EU is not that great, and there are many countries that want to join the EU. This is not because of the EU's religious beliefs, racial policies or traditional logic, but what really attracts other countries is the EU's consensus on economic and trade development. This consensus can even make many countries on the European continent sacrifice part of their national sovereignty to join the EU. This is the real attraction of the EU.
If we analyze from the perspective of the EU's new international existence, the separation of the US and the EU is a historical necessity, because the two are no longer on the same historical level, that is to say, they are no longer the same species, and it is impossible for them to have a common consensus on future development. The US has been trying every means to mess with Brexit, etc., which is actually fundamentally a rejection of the EU's new existence (Trump said that the EU exists to weaken the US), which goes against almost all the "traditional" consensus building between the US and the EU.
After World War II, Germany and France established the coal and steel customs union, the European Union, and the euro. In recent years, French leaders said that NATO was brain dead, and now Germany has begun to break through its fiscal budget and gradually take responsibility for Europe's security. Recently, I also saw that Germany has begun to station troops in Lithuania. This is actually a trend, but many times, due to the EU's mechanism and procedure problems, we often feel that various things will be repeated, but the overall direction is very clear.
Does praising the EU mean that China should try to win over the EU? It doesn’t really matter, because the existence of the EU will not affect China’s various decisions. Just like the tariff war, China will not consider what measures the EU has taken before facing the US. Analyzing and discussing the EU is just a way of thinking about how the world trend will develop in the future era of global multipolarization. The main point here is that if we rationally discuss the future development of the US-EU relationship, the EU actually still has many illusions, and the US no longer recognizes the EU in all aspects.
In other words, only if the EU disintegrates and European countries start pursuing "purity" according to the logic of the United States can the United States' demands be met, but this is unlikely. The extreme right-wing systems in Germany and France, which are strongly supported by American public opinion, are unlikely to become mainstream at present. This is determined by the new form and new consensus of the EU, which is no longer the Europe of World War I and World War II. The United States can promote a gradual decoupling from Europe in terms of security, but it is unlikely that the dissatisfaction at the economic level can be resolved through superficial compromises.
In such a context, the world needs a new trade system and relationship model in the era of multipolarity. Now many people only care about the outcome of the tariff war. In fact, there will be no winner in the tariff war, and you can't find tools or numbers to measure the win or loss. When tariffs are increased to a certain level, specific trade will disappear, but each new internal economy and external circulation will still have new continuity.
In fact, there is a difference between a tariff war and a real hot war. A hot war can be calculated by the occupied land, sacrificed population, equipment attacked, etc., while the essence of a tariff war is to crack down on transactions. Transactions are the implementation link of economic operations. Cracking down on transactions is not good for both parties. You can't say that it is best for me if I don't buy your products, or that it is best for you if you don't sell your products to me.
So where will the US-China tariff war end up? Here are three directions for your discussion.
The first is that the tariff figures between China and the United States have no meaning. It is difficult for high-level calls to go smoothly. The most likely possibility is to maintain certain contacts and communicate appropriately at the grassroots and lower levels, and then expand contacts when the situation improves. The main responsibility for the escalation of this tariff war does lie with the United States, because the United States initiated it first, and at the same time expressed threats and disrespect. This model can be used in other countries, but based on the history of the new China system, it is absolutely not acceptable. This will trigger the Chinese people's memories of humiliating history, and there will be no logic of concession.
But I have already said that tariffs are just a kind of transaction. If there is no absolute compromise in the transaction, you will definitely suffer losses. If you are tough, you will definitely gain advantages. Is the resulting increase in domestic prices or economic recession in the United States a benefit for the American people? Of course not.
The second is that if there is real economic and trade competition between China and the United States, it will be more reflected in the contribution to the future world, rather than the present. In other words, it mainly depends on who will contribute more new technological products, greater reciprocal trade, more peaceful and orderly regional space, etc. to the future world, and these will take a longer time to manifest. Therefore, who will win in this regard, China or the United States, may exist in their respective universities and laboratories, corporate technology research and development, more consumer scenarios, every international trade negotiation and transaction, etc. It is not a question of who called first, which is not the focus.
The third is that China and the United States need to create a new cooperative consensus system. Based on the huge shocks brought to the world after the escalation of the tariff war, if China and the United States enter a larger conflict system, it will be completely devastating to the world. Therefore, if the two sides rethink what kind of higher-level consensus should be created when China and the United States get along in the future based on the tariff war, just like at the European level, the possibility of a war between EU member states is already very small.
This does not mean that only by moving towards the EU mechanism can China and the United States avoid greater conflicts, but what kind of economic and trade consensus, as well as the way of mutual embedding, can enable both sides to cede some rights to maintain the permanent stability of the entire relationship. This seems difficult and requires continuous thinking. Another important point here is that there is also a phenomenon in the world that there are many national forces that do not want Sino-US relations to improve. What role these national forces will play in the future will also affect the direction of Sino-US relations. But no matter what, the immaturity and over-impatience of this US government in its relations with China are indeed worrying.