US-China Trade Spat 'Comes on Heels of a Lot of Paranoia About Beijing' - Prof

Sputnik: Are you at all surprised by introduction of the new tariffs?

Ann Lee: I don't think we should be surprised. I think that ever since Trump entered office, he's been flip-flopping on policies left and right. This is to be expected. A lot of people have speculated that this is just a negotiating tactic.

I also think another thing that might be operating in the background is just the debate within the administration given that there are some folks who are extremely hawkish against China, and others who are more level-headed. I think that there's deal-making going on between those two factions as to what they are willing to sign onto and what the overall policy should be. I think that is the cause for the schizophrenia that's going on.

The establishment thought that they were going to follow a specific agenda. So were the [US's] allies. Now they've had to sort of recalculate how they're going to achieve their goals. This is coming at the heels of a lot of paranoia about China's rise, Beijing's Made in China 2025 agenda, and enormous debate in Washington as to what is the best way to put a halt to the progression there, and the best way to maintain US superiority in the security and economic realm.

So there is a lack of agreement on the specific strategy, and therefore it comes across as a lot of disjointed statements [to the effect of] 'we're going to negotiate', 'no, we're going to slap on tariffs'.

Sputnik: Do you think a trade war is now going to explode? Or is the potential there to calm things down?

Ann Lee: I think that the hawks really want to escalate things, because they know that the more chaos they create, the harder it is for China to achieve its goals. But if they do that it will cause a lot of harm to the US economy as well, and there are plenty of industries with lobbyists in Washington trying to stop that from happening. 

That's why I'm saying that there's basically an internal debate going on, which is why it seems to go in fits and starts, and every time there seems to be a negotiated agreement with China, they turn around and change everything and make a lot of parties very unhappy.

It really boils down to which industries have the biggest voice and the most power in the administration that's going to win the day.

Ann Lee is adjunct professor of economics and finance at New York University, and author of the award-winning international bestseller What the US Can Learn From China. The views expressed by Ms. Lee are those of the author, and do not necessarily reflect those of Sputnik.