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Selling F-16s to Taiwan Is Bad Business

September 17, 2019 in Economics

By A. Trevor Thrall, Jordan Cohen

A. Trevor Thrall and Jordan Cohen

On the surface, the Trump administration’s proposal to sell F-16 fighter jets to Taiwan seems to make sense. It makes money for American companies, helps an ally provide for its own defense, and provides a check on a rising China. But a closer look reveals that it will prolong the trade war, do little to help Taiwan defend itself, and raise the risk of war. And that is a deal the United States can do without.

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News of the deal surfaced in mid-August, when the State Department notified Congress of its intention to sell 66 of the jets for roughly $8 billion. That followed close on the heels of agreements made in recent months to ship Taiwan 108 M1A2 Abrams tanks and 250 Stinger missiles worth $2.2 billion. The primary justification for these deals is the defense of Taiwan from China, to which the United States committed itself in the 1979 Taiwan Relations Act.

Let’s start with the trade war. Trump started slapping tariffs on Chinese imports to the United States in March 2018, based on his assumption that trade wars were “easy to win.” Unfortunately, Trump has found his counterpart, Xi Jinping, to be a much tougher customer than he expected. Rather than sitting down at the negotiating table, China has responded with its own tariffs.

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The trade war has already cost both countries and the global economy dearly. In the U.S., the bond market has hit its lowest level since 2007 and economic confidence among small U.S. companies fell to the lowest level since November 2012. U.S. factory activity, dependent on Chinese suppliers, also fell for the first time in three years. Things are not better in China, where the yuan has hit an 11-year low and economic growth has fallen to its lowest level in 27 years.

In short, the timing of the arms sales to Taiwan could not be …read more

Source: OP-EDS

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