U.S. Trade Policy at a Turning Point: How America Can Better Protect Itself Against China’s Predatory Policies

Trade policy in the United States has reached a turning point as a rising China seeks absolute advantage across a broad range of vital industries. If the United States rejects both free trade and protectionism, and going forward adopts power trade as a strategy, what needs to be done to implement that strategy? This is the third of three articles Rob Atkinson has written in The International Economy examining power trade as practiced by Germany before World War II, and by China today. (Previous articles described the resemblence between them and reviewed how America has practiced power trade in the past.)

The practice of U.S. power trade from 1945 to 2016, focused as it was on ensuring global market integration (outside of the Soviet Union and then Russia)—even at the expense of U.S. industrial competitiveness—has run its course. America’s adversary today is not a sclerotic but militarily powerful foe that could inflict little or no economic damage outside of its bloc. China today is a dynamic, militarily and technologically powerful foe that can and does inflict considerable economic damage around the world, including to the U.S. economy.

As such, the United States needs to shift from an approach to power trade based on advancing U.S. foreign policy interests to an approach that focuses on advancing U.S. competitive advantage against China, especially in critical advanced technology sectors. Doing so necessitates a new approach to trade strategy, including a more sophisticated and analytical role for the federal government.

Read the full article. (PDF)