On China, Trump picked the right battle but the wrong strategy

We are in for a long trade war. In the months since “Liberation Day” last year, when Donald Trump let loose a volley of tariffs against imports from everywhere, countries have rushed to build new relationships in the hope of maybe circumventing the US to protect the global trading system. The European Union hurried to sign a trade agreement with South America’s Mercosur bloc that had been sitting on ice for years. China and south-east Asian nations deepened their trade agreement. The Canadian prime minister, Mark Carney, travelled to Beijing hoping to build closer ties. Hopes of rebuilding the open trade architecture are probably futile. Global trade will be shaped by an emerging new imperative, to stop China’s export juggernaut and end its lock on the supply of strategic inputs – from pharmaceutical components to critical minerals to essential chips that are vital for industries around the world. The United States will remain China’s main opponent. But other countries, in Europe and elsewhere, are also rummaging through their policy kits to evaluate their options, from tariffs and domestic subsidies to export controls. The war will come at a cost to economic wellbeing. Prices of consumer goods will rise as countries block imports from China. Manufacturers will have to cope with pricier Chinese inputs. Chinese exporters will have a harder time finding markets to place their stuff. And exporters in the US and elsewhere may be locked out of China’s market. …