*1 A version of this article is published as Contractor, Farok J. What is at stake in China-US relations? an estimate of jobs and money involved in the bilateral economic tie. Rutgers Business Review, Vol. 2, No. 1, pp. 1–22 (2017). And an excerpt was published in YaleGlobal Online as “Disrupting US-China Relations Will Incur High Costs.” February 28, 2017.
Alarm bells are ringing about President Donald Trump’s pronouncements against China as well as his threats to impose a 45% tariff against Chinese imports after declaring the country to be a “currency manipulator.” For all the concern, however, I have not seen a single calculation of the dollar costs, or impact on jobs, if Trump’s policies were actually implemented. This article is an attempt to estimate the answers to the following questions: In the event of a break in the bilateral relations, How many jobs in the US and China are at risk? What would be the extra purchase price for consumers if, hypothetically, imports from China were replaced by US manufactured products? Is it possible, or even likely, to “bring back” production from China to the US? What would be the consequences if China retaliated against US-made products and services? What if China pulled out its $1.2–1.8 trillion investment in US securities? And what about American companies’ investments in China?