The U.S. ambassador on the spot in an Asian economic powerhouse put it bluntly in a cable to the secretary of state in Washington: Don’t cut them off. Give them some “economic elbow-room,” or they’ll be forced to carve out an economic empire of their own by force. But Washington was in the grip of economic nationalists battling a historic economic downturn. The White House, consequently, was deaf to the Ambassador Joseph Grew’s pleas from Tokyo in 1935.
Within a few years, the United States ramped up economic pressure on Japan, culminating in a trade and oil embargo. Six years after Grew wrote his dispatch, the two countries were engaged in total war.
Today, American policymakers are consumed by the economic and geopolitical confrontation with another Asian heavyweight. And, as in the 1930s, economic decoupling is all the rage.
For the more hawkish members of the Trump administration, undoing 40 years of ever-closer economic relations with China and rolling back U.S. reliance on Chinese factories, firms, and investment was always the end game of the endless trade war—even before the coronavirus pandemic turbocharged Washington’s desire to disentangle itself from what many view as a dangerous economic bear hug. Now, lawmakers and administration officials are mulling a raft of measures to cleave parts of the two largest economies in the world: Bans on a wide variety of sensitive exports, additional tariffs on Chinese goods, forced reshoring of U.S. companies, even pulling out of the World Trade Organization altogether, which is seen by some as facilitating China’s so-called economic imperialism.