U.S. trade war with China risks global fallout, says McGill economist
By William Crooks
Local Journalism Initiative
The escalating U.S.-China trade war is shaking the global economy—and Canada may find itself caught in the middle, according to Julian Karaguesian, a faculty lecturer in McGill’s Department of Economics and former senior advisor with the federal Ministry of Finance. With over two decades of experience in international trade and finance, including postings in Berlin and Washington, Karaguesian warns the current trade tensions are anything but ordinary.
He characterized the United States’ current strategy toward China as a combination of irrationality, deliberate realignment, and tactical pressure. “It’s part mad king, part I want to realign the global trade system, and part negotiations,” he said. The tariffs now in place—as high as 125 per cent on some imports—have made trade between the two economic giants prohibitively expensive. While U.S.-China trade totals roughly $600 to $650 billion, the impact of these policies is far more widespread. These two nations are embedded in hundreds of global supply chains, he explained, and placing barriers between them disrupts far more than direct imports and exports.
To illustrate the complexity, Karaguesian pointed to Apple’s international operations, where design, marketing, and component production span over 30 countries, with final assembly taking place in China. “It’s assembled there, and then it’s ferreted around the world,” he said. Tariffs, in his view, are “like an earthquake under the global supply chain.”
He argued that the current protectionist wave did not originate with Trump. “The border with the United States has been thickening since 9/11,” he said, referencing shifts under George W. Bush, Barack Obama’s Buy American measures, and the quiet but firm protectionism under Joe Biden. Trump’s approach, he suggested, simply made the underlying trend more extreme. “He’s using a blunt kind of hammer-like policy instrument.”
