Economic sanctions are different from trade wars. These two concepts are often confused in the Asian region, especially when it comes to relations between the US and China. In fact, they differ both in goals and in methods. Trade wars are aimed to achieve economic advantages for national producers. Tariff regulation is the main means of carrying out a trade war. Countries can remain partners and even allies, but still wage major trade wars. Sanctions, on the contrary, pursue mainly political goals. The initiating country aims to have the target country make specific political concessions or change its political course.
For a long time, US sanctions targeted countries that Washington branded as ‘rogue states’. In a number of cases, the UN Security Council supported these restrictions, particularly when it was necessary to stop the proliferation of nuclear missile technologies or nuclear weapons.
But Washington’s unilateral restrictions and extraterritorial sanctions are increasingly affecting major players. China is becoming the main target in Asia. Until recently, the problem amounted to episodic fines and secondary sanctions against individuals and select companies. Their overall number was not high, and the US actions were not causing political problems. Today, however, the situation is changing. Containing China has become an agenda in its own right for the United States, increasing the risk of sanctions and China’s retaliation.
Chinese leaders are wielding a wide range of levers. An escalation of sanctions is fraught with grave damage to US–China relations.
Nevertheless, a confrontational scenario is not yet preordained. The United States may preserve its leadership, at least in the medium term, possessing as it does great potential for using economic restrictions to achieve political goals.
However, the abuse of sanctions and unilateral moves, like the withdrawal from the JCPOA, will erode support for the US even from its allies. The financial sovereignty rhetoric may be converted into specific strategies. China has greater capability than anyone else for implementing them. It is quite likely that an awareness of the need for a coalition game and multilateral diplomacy will prevail in Washington. The point of no return has not been passed yet.