The following article discusses the pessimism that circulates around the trade war with the People’s Republic of China (PRC). The trade war between United States and the PRC has been going on for several months and if a compromise is not reached more tariffs will be imposed by the US Government. According to the article, President Trump has announced to raise tariffs on $200 billion worth of goods imported from China. The President is focusing to narrow the trade gap between China and the US. The Trump administration is also trying to force the PRC to stop subsidizing state owned companies so that there is a healthier and more competitive ground for financial competition.
The FOREIGN policy that lead to trade war with the PRC has substantial mercantilist ideas. The idea of balancing trade in your own favor, protecting the state and individuals, regulating the market, and saving infant industries stems from mercantilist ideology. First, the President’s desire to balance trade with China is clearly a mercantilist idea. According to Balaam and Dillman, the state’s goal is to minimize imports and to maximize exports to achieve relative gains. The intentions of POTUS are the exact same. Second, by balancing trade, states are able to achieve one of their essential objectives, protect the state. Mercantilists, believe in realist world view and accept that the world is in anarchy. Therefore, mercantilists want to maintain state strength in order for a state to be able to provide self-help. The rhetoric that America is losing in trade and needs to balance with China, clearly represents this idea. Third, imposing more sanctions lead to more regulations on the market, which is the second key assumption of mercantilism. This can be clearly seen in $50 billion sanctions that are currently imposed. Finally, the third assumption predicts that the state will protect the infant industries. The PRC subsidizing its companies and US demanding to stop subsidies epitomizes this idea. The PRC subsidizing companies exemplifies protective policies for infant industry protection.