Trump's China tariffs to harm rules-based liberal trade

A trade war between the United States and China will harm both countries as well as the rules-based system of liberal trade which was once developed by the United States, said Carl Fey, a professor of international trade with the School of Business in Aalto University on Wednesday.

U.S. President Donald Trump's proposed earlier to slap tariffs on up to 60 billion U.S. dollars of imports from China as well as harsher restrictions on Chinese investments, triggering concerns across the globe of a trade war between the world's two largest economies.

Ironically, the possible trade war "could hurt the United States more than it hurts China," said Carl Fey.

Fey said there will always be some companies and people that will not benefit from free trade. Washington should have a more active policy to help them reposition so as to succeed instead of the "knee-jerk reaction to start a trade war with China."

Today the world economy is so integrated that a trade war between the United States and China will not only affect the two countries but also many other countries, he said.

If China and the United States end up raising tariffs on each other's products, the greatest victim will be the rules-based system of liberal trade which is starting to take hold in much of the world, fostering economic growth.

Ironically, the liberal trade was developed by the United States, Fey said.

The U.S. decision to impose a 25-percent and 10-percent tariff on steel and aluminum imports respectively will "likely lead other countries to follow a similar strategy in other industries and that would be very bad for the global economy," he said.

Fey said the best solution is dialogue. "By implementing the new tariffs, Trump is likely to hurt the very people he is trying to help - the average American."