The United States announced today its duty to levy a 25% high tariff on China’s US$50 billion in goods, and on July 6th it will impose a 25% tariff on imports of Chinese goods worth US$34 billion. Trump threatened to increase taxation if China retaliates.
Beijing authorities, who are communist leaders, also offer a list of goods subject to taxation duties, including cars and agricultural products, which may undermine the Republican political interests.
The US side still expressed its intention to negotiate with Beijing. After the announcement of the tariff measure, US Trade Representative Robert Lighthizer accepted the Fox Business Network visit and said: "We hope this will not cause a series of reactions from China. .. We hope this will lead to further negotiations. We hope this will lead China to change its policy."
Both parties take a step back
Less than a month ago, this situation seemed likely. After the United States and China discussed with Washington, the US Treasury Secretary, Steven Mnuchin, stated that the United States “does not consider trade wars” and will not impose tariffs. As a result of external expectations, the United States may accept that China has slightly increased its purchases of U.S. goods. However, within a few days, Trump no longer supports such negotiation guidelines.
Today, it seems that there is no possibility of a short-term withdrawal. A senior U.S. government official said today that the United States looks forward to a structural change in the way that China deals with scientific and technological issues. The U.S. government requires the Beijing authorities not to force U.S. companies to transfer technology. However, Beijing stated that it will not agree to drastically adjust its "Made in China 2025" program of action. This program states that China plans to play a leading role in emerging industries such as artificial intelligence.
China concessions
Chinese President Xi Jinping defended the existing global trade order. Of course, this is crucial to China’s gains and losses. Over the years, state-driven investment and exports have led to economic growth, and the government of Xi Jinping is planning to shift its focus to consumer spending. In order to slow down the economy gradually, the trade war may disrupt Beijing’s prudent management of the economy, and in May China’s economy has shown signs of worsening than expected.
For the United States, the most favorable situation is for China to concede on scientific and technological issues and to open up markets for U.S. goods and services. Rod Hunter, former head of the international economy at the White House National Security Conference under President George W. Bush, said: In a sense, if you are a trade negotiator, having a president such as Trump is a big advantage, because everyone knows that he will levy tariffs, which put a lot of pressure on negotiators."
American concession
Since Trump took office, the negotiating results are not yet significant. The United States promotes the revision of the North American Free Trade Agreement and it is still pending. Trump and North Korean leader Kim Jong-un have a high-profile meeting this week. Critics think that there is not much to gain. China probably thinks Trump is bluffing. It also knows how triumphant Trump will be if the stock market rises and the United States economy is strong.
The list of commodities that China intends to impose tariffs on includes a variety of agricultural products such as soybeans, sorghum, and cotton, which may hit the 2016 agricultural state that supports Trump.
Terry Haines, general manager and political analysis head of Evercore ISI, told Bloomberg TV: “The signal released by Trump is that he not only wants to continue negotiations, but in fact he hopes. Can solve problems in the short term, rather than stretch the front."
Comprehensive trade war
It is reasonable to conclude that the United States and China cannot resolve the dispute immediately and the situation may deteriorate quickly. No one wants to be seen as a weakness. Trump relied on the support of the state where the traditional industry is located to take up the presidency. These states are deeply globalized. In the face of the midterm elections in November, Trump shouldered the pressure to appease these areas of origin. As regards China as a leader in global technology, it is an important part of Xi’s strategic plan.
If Trump urges China’s basic economic model to become more comprehensive, the world will remain under tension between the two countries for a long period of time. The United States’ previous government had also asked the Beijing authorities to relax controls on steel and other industries, but the effect was not significant.