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U.S. Has Better Ways To Solve China Dispute Than Tariffs Increases, Steve Forbes Says

This article is more than 4 years old.

Forbes Asia

The U.S. has better ways to resolve its trade disputes with China than through higher tariffs, Forbes Media Chairman and Editor-in-Chief Steve Forbes said at the annual Forbes Global CEO Conference that kicked off in Singapore today.

“There are other ways to deal with these things rather than putting on tariffs --  which is another word for taxes -- on each other,” he said.  “Everyone is hurt.”

U.S. President Donald Trump and Chinese negotiations reached a last-minute preliminary agreement last week that led Washington to postpone a new round of tariff increases aimed to pressure China to open up its market.

Protectionist policies have repeatedly caused economic damage over history, Forbes said. By contrast, the removal of trade barriers has played a big role “in the great prosperity” the world has enjoyed since World War II, he said.

“Trade is a good thing, not a bad thing. Adam Smith taught us that everyone gets something from a transaction. It's not zero sum," Forbes said. “About two and a half years ago, our president said trade wars are easy to win. Well, military wars are not easy to win. They always take turns you don't anticipate, and trade wars are no different,” he said.

“Now, the U.S. is finding today that it is paying a price” for recent tariffs hikes, Forbes said. “Businesses want to know what the details are going to be” of last week’s U.S-China trade truce, Forbes said. “When you have uncertainty like a trade war, business investment goes down,” he said. “It’s hurt investment in the U.S., it’s hurt agriculture, it’s hurt manufacturing.  And this is the reason why – even though the U.S. economy has done well in the past two and a half years -- it is slowing down, because consumption is based on production, and production is based on investment. Unless investment picks up, ultimately, the consumer will falter in the U.S. and we’ll have even slower growth.”

“You saw one little harbinger of that in August,” Forbes continued. “Job openings fell to the lowest level in 18 months. We still have a very healthy employment situation, but you can see that things are starting to go in a not-very-good direction.”

“That's why the president, I think, is starting to become more open to at least a partial deal with China,” Forbes said. “With the U.S. election coming up and the need to have a strong economy, I think the president's much more open to a trade deal that is not quite as sweeping” as he thought only a few months ago, he said.

Opening today, the 19th annual Forbes Global CEO Conference has attracted about 400 business leaders from around the world. Other speakers include Jack Ma, founder of Alibaba Group, JP Gan, who ranked No. 5 on the 2019 Forbes Midas List of the world’s top VC investors, and Jane Sun, CEO of Ctrip.com.

The two-day meeting is being held against a backdrop of slowing economic growth and heightened geopolitical uncertainty. The conference theme this is year “Transcending the Turbulence.”  It ends on Wednesday, Oct. 16.

--Follow me @rflannerychina