Trump still thinks that complete de-coupling from China is an option

(June 19) In this era of globalized trading, the idea of complete decoupling from the economy of another nation, cutting off all economic dependencies is a tall order.

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Trump sees decoupling from China as an option

With recent tensions between China and the US growing Trump has actually suggested that decoupling is an option for the US even though the annual trade now between the two countries is more than $600 billion.

Even after damaging trade wars with China and one day after Trump's top trade adviser Robert Lighthizer warned him that complete decoupling was not a reasonable policy Trump still insists that it remains an option. U.S. Trade Representative Robert Lighthizer told lawmakers that "I don't think [decoupling is] a policy or reasonable policy option at this point." Lighthizer also claimed that the U.S.-China trade deal is on track. Trump wrote in a tweet: "It was not Ambassador Lighthizer's fault (yesterday in Committee) in that perhaps I didn't make myself clear, but the U.S. certainly does maintain a policy option, under various conditions, of a complete decoupling from China."

The two super powers decoupling completely would be disastrous

The US would probably fare the worst even though the devastation would be on a global scale. The US would have a difficult time as it scrambled to replace items made only in China or raw materials mostly available there.

Trump appears to have a skewed unrealistic view of trade considering it a type of zero-sum game. He appears to think that if the US cuts $500 billion of imports from China then it gains $500 billion. However, some imports also help US companies who get inexpensive parts from China. Trump could argue that the parts could be made in the US. Even if they could US consumers could pay much more.

Continually raising the issue of decoupling could negatively effect any diplomacy with China. It could signal to China that the US is not a reliable partner. The Chinese might decide to develop and stress trade relations with other countries to protect themselves from possible US actions.

Previously published in the Digital Journal