Abstract:
China exports more to the United States than US exports to China. The resulting trade deficit against China has been a major issue during the presidential campaign and now is a real issue facing the Trump administration. President Trump has claimed repeatedly that China is “stealing our jobs” and China is a “currency manipulator.” The currency manipulation designation can easily escalate to a trade war with China. Several questions arise: (1) Is China a currency manipulator? (2) Is a looming trade war with China inevitable? (3) Who are the losers and winners in a trade war? These are not easy questions. The answers lie not only in sound economic analyses, but also in wise political judgements.
