China US Photo: GT

Signs that the Biden administration doesn't appear to have given up on the idea of starting a new trade war against China have triggered renewed market concerns over the escalation of trade frictions between the two nations.

White House officials are considering to launch a probe into the Chinese use of industrial subsidies under Section 301 of the US trade law, reported The Wall Street Journal over the weekend, citing people familiar with their plans.

The Biden administration hasn't made any final decision, and it remains unclear as to how far any investigation will go. Yet, a Section 301 investigation, once launched, would likely deliver a new blow to China-US economic and trade relations that have been relatively stable for months. If the Biden administration resorts to Section 301 investigation to put trade pressure on China, it would probably be followed by a new round of sanctions or tariffs on Chinese products exported to the US.

The news came at a time when US business groups called on the Biden administration to restart negotiations with China and cut tariffs on $300 billion worth of Chinese imports. In a letter to US Trade Representative Katherine Tai and Treasury Secretary Janet Yellen, these business groups urged to remove tariffs that actually harm US interests. If the Biden administration were to impose new tariffs instead of eliminating old ones, it would be a worrying signal for bilateral economic ties, which would not only damage specific industries but would also be a huge blow to the overall market confidence.

In fact, there are already concerns that US trade rows with China might escalate as observers believe ending the Afghan war would allow the US more resources to focus on tackling China and Russia.

However, the idea of using unilateral measures to suppress China, which may cater to the "political correctness" of playing tough toward China, is so misguided that The Biden administration cannot achieve any meaningful aim. 

The facts already show that tariffs have harmed American companies and consumers. US importers absorbed 92.4 percent of additional costs resulting from the elevated tariffs imposed on Chinese goods, according to a report by Moody's Investors Service. Oxford Economics estimated the cost of the trade war to be around 0.5 percent of US GDP during 2018-19, equivalent to $108 billion, which also cost the US 245,000 jobs and $88 billion in real household income. Tariffs have pushed up prices and exacerbated US inflation levels.

Moreover, the use of the Section 301 is brutal unilateralism by the US to force China to give in, but China has the determination and resolve to defend its own interests. Section 301 is part of the US domestic trade laws. If the US wants to use its domestic rules, instead of WTO rules, to wield the stick of trade war against China, it would constitute the reckless trampling over the WTO mechanism which it had built, and China would resort to WTO rules to fight back. These actions are akin to attempting to rewrite international maritime law by using the bylaws taken from a community yacht club, and is nothing more than a dangerous attempt to destroy international trade order and imperil the global economy.