San Diego The trade war between the People’s Republic of China and the United States is on hold — at least for the time being. The Chinese and U.S. governments have spent the past few months threatening to impose various tariffs and other protectionist measures on the other, only to retract much of them after intense negotiations in Beijing and Washington, D.C.
While the trade war was ramping up, businesses in both countries got caught, China placed a regulatory hurdle in front of Qualcomm, slowing their planned takeover of NXP Semiconductors. Around the same time, China announced a 179-percent import charge on sorghum from the United States, a crop that is used to feed livestock and make a popular liquor product.
This was after the U.S. government announced it was halting sales of U.S.-made components to ZTE, China’s largest smart-phone manufacturer, which announced it would close its operations. President Donald Trump then tweeted that the U.S. would help ZTE get its business back online; China retracted the sorghum tariff in response.
Barriers to Trade
If implemented, these huge tariffs would make many products from each country more expensive in the other country. Such tariffs and other charges are just barriers to trade, which only result in injuring consumers’ pocketbooks and producers’ bottom lines — from both countries.
No country wins as distortions in trade proliferate, inefficient domestic producers are rewarded, and the rest of the world knee-jerk reacts with its own protectionist stances. The International Monetary Fund has warned that the growing trade war could disrupt the global financial outlook.
As international trade and global economic growth are injured, a coming technology that should mitigate these losses: the blockchain. A universally transparent and distributed ledger that eliminates the need for the usual trusted intermediaries, blockchain technology is highly disruptive. The monopoly-like centralized services of commercial banks, social media giants, and search engines will be supplanted by computers and the programmers who write code for them.
With the blockchain, buyers and sellers conduct business directly with great efficiency and transparency for their purchase and sale of their products and services. In short, blockchain is a threat to the largest corporations’ hold on global finance, corporate information sharing, and social intermediation. Trade and payments processes are distributed among many, not a few privileged institutions that maintain a stranglehold on international finance.
True peer-to-peer transactions will be cheaper, and our data will belong to us — not for others to sell. More importantly the blockchain will facilitate higher productivity and more robust economic growth.