TAIPEI (TVBS News) — Abraham Newman, the co-author of "Underground Empire," warned on Monday (April 21) that escalating U.S.-China trade tensions could fracture the global economy, accelerating fragmentation. Speaking to National Taiwan University (NTU) students, he cautioned that China's response to stringent tariffs might involve dumping surplus products on international markets.
Newman pointed out that countries under economic pressure don't always respond with economic measures. "History shows that militarized reactions tend to be the solution as sanctioned countries feel increasingly encircled," he said, referencing the militarization of Japanese plans in the Pacific under similar economic constraints.
Newman highlighted the potential significant impacts of the U.S.-China "game of chicken" on third countries. If China floods the European Union or Japan with excess goods, these nations might implement protective tariffs in response.
When asked about weaponizing interdependent products as economic coercion, such as rare earth metals, Newman noted that such strategies often create complex issues. These include retaliatory embargoes, especially for products with mutual dependencies between nations.
If China weaponizes rare earths through embargoes, partner countries would likely seek alternative sources, similar to Japan's previous response to China. For China, such embargoes could mean losing significant profit margins in key industries.
Economic interactions between China and Australia demonstrate that China often makes concessions when resources are needed, highlighting the practical challenges of economic coercion in today's interdependent global trade scenarios. ★
