If the U.S. wants to avoid a very damaging outcome to all this, the less immoderate Republicans and the Democrats need to be thinking hard about how to take power away from Donald Trump on trade matters—and national security matters—come January 5, 2019: Martin Wolf: Donald Trump declares trade war on China: "The Trump administration has presented China with an ultimatum on trade...

...The US administration is either so foolish that it does not understand this or so arrogant that it does not care.... China is to reduce the US-China trade imbalance by $100bn in the 12 months beginning June 1 2018, and by another $100bn in the 12 months beginning June 1 2019. China should also immediately eliminate all “market-distorting subsidies” conducive to excess capacity. It will strengthen intellectual property and eliminate technology-related requirements for joint ventures. “Furthermore, China agrees to... cease the targeting of [US] technology and intellectual property through cyber operations, economic espionage, counterfeiting and piracy. China also agrees to abide by US export control laws.” Moreover, China will withdraw requests for World Trade Organization consultations relating to tariff actions on intellectual property. “In addition, China will not take any retaliatory action... in response to actions taken or to be taken by the US, including any new US restrictions... China immediately will cease all retaliatory actions currently being pursued.” China “will not oppose, challenge, or... retaliate against US imposition of restrictions on investments from China in sensitive US technology sectors or sectors critical to US national security”. But “US investors in China must be afforded fair, effective and non-discriminatory market access and treatment, including removal of... foreign investment restrictions and foreign ownership/shareholding requirements”. By July 1 2020, China will reduce tariffs in “non-critical sectors to levels that are no higher than” equivalent US tariffs. It will also open access to services and farm products as the US specifies. The agreement is to be monitored quarterly. Should the US conclude that China is not in compliance, it may impose tariffs or import restrictions. China “will not oppose, challenge or take any form of action against” any such US impositions. China will also withdraw its WTO complaint that it is not being treated as a market economy.

What is to be made of these demands?... Ridiculous. It would require the Chinese state to take control over the economy—precisely what, in other respects, the US demands it not do.... Finally, the idea that the US will be judge, jury and executioner, while China will be deprived of the rights to retaliate or seek recourse to the WTO is crazy. No great sovereign power could accept such a humiliation. For China, it would be a modern version of the “unequal treaties” of the 19th century.

The Americans seem sure they can force the Chinese to sue for terms, how ever foolish and humiliating these are. China would indeed be hurt more by a tit-for-tat tariff war than the US. This is because its exports to the US dwarf those from the US to China....Americans who are better aware of the national interest than the administration need to understand that the US will find itself on its own if it seeks conflict. That is what must happen when a leader turns into a self-regarding bully.

#shouldread

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