Jack Ma, wonders out loud about the wisdom of the U.S. engaging in a trade war with China.
While President Trump was elected on the promise to make changes to the trade policies by the United States, Ma is concerned that the rhetoric and knee-jerk actions will only cause a loss of jobs and business.
Of course, there is a lot at stake for Alibaba and Jack Ma. While the company has struggled to gain a foothold in the U.S., they have been successful to bring U.S. goods to China.
A trade war may jeopardize these efforts as industry segments get caught up in the trade and may keep some companies from engaging with China until there is more clarity on future trade.
The U.S. has a structural trade deficit with China because of the market forces of comparative advantage: Economies produce what they are best at making and import other things.
Dollars earned from trade surpluses in China have been recycled to finance American borrowing, keeping U.S. interest rates low with favorable economic conditions. American unemployment stood at 4.1 percent in March, a 17-year low. All these economic indicators suggest that the U.S. economy is doing well, regardless of the trade deficit.
China embraced this American-led globalization because it was also the best path for China’s development as an emerging economy. To raise living standards for 1.3 billion people, the Chinese government promoted foreign investment and built the economy on the strength of its large and increasingly skilled labor force.
As a result, China became the world’s largest exporter, with a significant trade surplus. American consumers benefited from low prices and American corporations made giant profits.