The United States and China have swapped consumerist and mercantilist strategies

From the 1990s to 2013, the United States had a consumerist strategy (favouring consumer purchasing power) and China had a mercantilist strategy (export-led growth thanks to a weak currency). This resulted in the so-called “Bretton Woods 2” system: the United States bought cheap Chinese products and had a trade deficit with China, which was financed by China’s accumulation of foreign exchange reserves, which allowed China to produce and export more to the United States. Since 2014, the exact opposite system has taken shape: the United States has switched to a mercantilist strategy, while China has adopted a consumerist strategy (it wants consumption and no longer exports to drive its economy). T he United States is therefore using the threat of tariffs to try to get China to buy more US products; China is trying to prevent its exchange rate from depreciating to avoid a deterioration in its terms of trade, which would be bad for consumers. Previously, it tried to stop its exchange rate from appreciating. In order to export more, the United States wants to bolster the use of fossil fuels and retain its technological advantage over China.