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Real trade war: Trump fixates on tariffs while China pursues global digital domination

Beijing

President Donald Trump’s tariffs-by-tweet tendencies and brinkmanship on both sides of the negotiating table have led to a breakdown in talks with China, an escalating trade war, and no doubt many sleepless nights in Beijing and in American boardrooms. But for the United States, the unease is misdirected.

What should keep American businesses and politicians up at night has little to do with levies on specific commodities or Chinese products. While Washington is targeting Beijing with tariffs over individual trade grievances, China has been laying the foundation to direct and influence digital trade — the booming engine of global commerce — unopposed, with deep pockets and grand ambitions.

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This should be our strategic and diplomatic focus, because what China is doing globally in this sphere has serious economic and national security implications for the United States today and well into the future. To the question of who will write the digital trade rules for the 21st century, the answer must be the United States. If the answer is China, we will have ceded the global digital future to Beijing.

No global rules govern digital trade, which covers everything from e-commerce to bank transfers to data collection. Today there are almost 4.4 billion internet users around the world, up more than 1,000% since 2000, with global e-commerce sales topping $2.8 trillion in 2018. Digital trade is the backbone of today’s business — when a customer in Japan orders a book from Amazon, when a bank transfers data from one country to another, or when an in-flight aircraft engine beams GPS information to a global data collection center. The fact that the global regulatory environment is still a free-for-all is astounding, given all that is at stake.

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