data/US-China_Trade_War/US-China Trade War.txt

The 47th President of the United States of America, Donald J. Trump, is going to take office on January 20, and if his statements during the election campaign offer any cue, he is going to launch a trade war with China. His first term ushered in a sweeping trade war with China, and his second term promises to double down on the tariffs on China on which he has vowed to impose an “additional 10 percent tariff, above any additional tariffs." On the face of it, a 60 percent tariff does not seem to be a tactic to strike a trade deal; it looks like an integral part of Trump's “America First” policy. And, this assertion is not ungrounded at all, as there are signs that attest to this possibility.

First, Trump's key cabinet picks are China hawks as they clearly and forcefully denounce China as a strategic rival. They will make any pragmatic deal-making difficult. He has picked John Ratcliffe (as CIA head), Pete Hegseth (as secretary of defense), Michael Waltz (as national security adviser), Elise Stefanik (as United Nations ambassador), Jacob Helberg (known as a Silicon Valley China hawk, for a key economic advisory role in the State Department), David Perdue (who in the words of Trump would be “instrumental in implementing my strategy to maintain peace in the region, and a productive working relationship with China's leaders as ambassador to China) and Marco Rubio (as secretary of state). All these individuals are known for viewing the US and China as being locked in a Manichean struggle for power and advocating a hardline stance towards Beijing.

Second, Trump genuinely believes that tariffs are paid by the Chinese side and that tariff revenues can replace other taxes to fund a downsized government. It is important to note here that tariffs are initially paid by importers or intermediaries working on their behalf, but the costs are usually transferred elsewhere. While Trump claims that exporters ultimately bear the cost of tariffs, research indicates the reality is more complex. Once tariffs are implemented, importers could choose to offset those costs by raising prices for consumers at the checkout. Foreign manufacturers might lower their prices to maintain relationships with importers, or they might invest heavily in relocating production to bypass the tariff altogether.

Third, Trump may be disappointed by the results of the Phase One trade deal and decide not to replay the old trick. And finally, Trump means what he says when it comes to tariffs. So his return to the White House signals that the United States is likely headed toward another trade conflict, and this time it won’t be limited to US trade with China. If this scenario materializes, then this trade war will have a global impact, affecting and benefiting countries.

As it is rightly said that trade wars inevitably create distortions for some players while offering opportunities to others. For countries like Pakistan, the US-China trade war offers a significant opportunity for Pakistan, as the largest single buyer of textiles and apparel, the US remains a lucrative market for Pakistan, which relies heavily on textile exports. The US-China trade war has put Pakistan in an advantageous position, and we have become more competitive than China in some areas, like textiles. It offers an opportunity for Pakistan to boost its exports to the United States as well as revive the closed manufacturing capacity.

There are two possible ways that Pakistan can turn one of the greatest economic shifts into its favor and establish itself in the international market as a key player in world economics:

High tariffs on Chinese products
The high tariff on Chinese products would make Pakistan's exports more competitive in the US market. It has always been very difficult to compete with Chinese products in any international market because of their low production costs due to cheap labor and economies of scale. However, the high tariffs have made these "cheap" Chinese products more expensive for the US buyers. Higher prices have led to a decrease in demand. This has left a gap that can be potentially filled by alternative sellers in the US market, such as Pakistan. Engineering, textiles, surgical tools, sportswear, plastics, footwear, fishery, packaging, pharma, kitchenware, furniture, and jewelry are some of the types of Chinese products that have been subjected to the high US tariffs. Out of these many Chinese products, Pakistan has the capacity to produce a substantial amount of products as exports for the US market.

Relocating labor-intensive industries to Pakistan
The Chinese manufacturers can ward off punitive tariffs on their exports to the United States by relocating their labor-intensive industries to Pakistan. Moving industries to Pakistan will be a trend in this case because of the recent economic goodwill established by CPEC. Such an inflow of foreign investment would boost the economic growth of Pakistan as the national income of the country will increase. These huge sums of foreign investment could lead to the establishment of special economic zones (SEZs) in Pakistan. The establishment of these new industries will be closely linked to foreign investments in improving the infrastructure of the country to make long-term production costs less.

The inflow of Chinese investment will only be the start of a very fruitful ripple effect, as more foreign investors will be attracted to set up industries in Pakistan. With Pakistan's geographical location, it could become a hot spot for future investments from all over the globe.

Conclusion
The US-China trade war has given Pakistan a golden opportunity that, if used wisely, could be an economic leap in Pakistan’s history. Pakistan could potentially end up with an increased amount of exports to the US and become a hot spot for international investments (especially from Chinese investors). However, certain economic and political limitations might put a dent in how well this opportunity can be explored.

Thus, what the Pakistani government should do is closely analyze all developments in the US-China trade war and make alternative plans of action, keeping in mind the geographic, political, and economic feasibility. Then, the best course of action should be taken. What Pakistan should not do is make rash decisions by overestimating their own potential and underestimating their limitations. Similarly, Pakistan should not underestimate its potential and overestimate its limitations. It should tread carefully over one of the biggest economic feuds in history and try to benefit from it in the best possible way.