In a new column, Aviva Investors’ AIQ imagines how hypothetical scenarios in finance and economics would play out. In this issue, we explore how the world would look if China had never joined the World Trade Organization.
In January this year, Robert Lighthizer, the US trade representative, put out a report stating unequivocally that the US had made a mistake in supporting China’s entry into the World Trade Organization (WTO) in 2001. Lighthizer argued that China, together with Russia, had undermined the WTO by not trading fairly with other members of the organisation.
These comments were no mere words. In March, Donald Trump announced a series of tariffs on imports from China, a move that was rapidly followed by reciprocal tariffs from China on US goods. While talks between the two countries have since continued in an effort to prevent tensions escalating further, it’s clear that under the Trump administration a fundamental principle of US trade policy has been reversed.
After decades of the US viewing membership of the WTO as a way to ensure better trading relations with China, the current government believes having China outside the organisation would make it easier to take action against what it claims are unfair practices, which have damaged US domestic manufacturing, led to widespread job losses and caused the US trade deficit to soar.