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A US trade war with China?

Today’s Wall Street Journal reports that China and America are preparing for the possibility of a trade war between the two nations. China’s recent announcement of a record high trade surplus with the US simply provides more fuel for President Trump to act on his instinct that Chinese trade hurts American workers. No other domestic policy issue so clearly divides the Republican Party between its business and populist wings, meaning that any protectionist action by Trump essentially launches a two-front war – one against China and the other against Chinese trade allies among the nation’s large businesses.

China and their business allies ought to note where public opinion lies, however, before thinking they can win this battle easily. The 2016 exit poll asked voters whether they thought international trade creates or takes away US jobs. Voters thought trade took jobs away by a narrow 42%-39% margin. Among Trump voters, however, the anti-trade margins were much higher. Over 60% of Trump’s voters thought international trade takes jobs away from American workers.

Anti-trade sentiment was even stronger in the three key Midwestern states whose unexpected support for Trump elevated him to the Presidency:

  • In Michigan and Wisconsin, 50% of voters thought trade cost Americans jobs;
  • In Pennsylvania, 53% thought trade cost jobs.
  • In each state over 60% of Trump’s voters agreed that trade costs jobs, rising to a high of 70% in pivotal Pennsylvania.

Populism has been rising throughout the world in large part because selected groups of people, often less-skilled native born workers, feel their voices are unheard. If American business wants to stop a trade war with China, it needs to hear these voices and think about how their actions can help mitigate the anger that is fueling anti-trade sentiment.