The US-China trade war has no end in sight
(Baonghean) - The US and China's consecutive announcements of imposing new tariffs on each other's goods over the weekend show that the confrontation over trade issues has not yet been resolved. The strategic competition between the two economies, the two largest powers in the world, has reached the point of exploding.
“Tit for tat”
A bilateral trade war is the most accurate way to describe the US-China relationship at the moment. On June 15, US President Donald Trump announced a list of Chinese goods worth $50 billion that will be subject to a 25% tariff, accusing Beijing of violating intellectual property rights. He also threatened to impose additional tariffs if China retaliated.
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| The US and China are entering a phase of strategic competition, first in the field of trade. Photo: AFP |
“The United States cannot continue to ignore the theft of technology and intellectual property through unfair economic regulations.”
According to the Office of the United States Trade Representative (USTR), this list includes 818 product categories, down from the 1,333 categories that President Trump proposed last April. This list of taxed goods is mainly high-tech products, but does not include goods that are popular with American consumers such as TVs, mobile phones, etc.
The USTR said on the same day that a new 25% tax on 818 categories of Chinese goods worth 34 billion USD will take effect from July 6, and then the US will continue to impose taxes on 284 other product categories that are believed to benefit greatly from China's industrial policies, such as the technology development program called "Made in China 2025".
And it didn't take long for China to decide to retaliate. Beijing released a list of US imports that would be subject to additional tariffs.
The Chinese Customs Tariff Commission was equally tough when it decided to impose an additional 25% tax on 659 US products worth a total of 50 billion USD. This is considered a response commensurate with the damage caused by the US.
According to the Commission's statement, the additional tariffs on 545 items worth a total of about $34 billion, including agricultural products and cars, will take effect from July 6. The time for applying additional tariffs on the remaining 114 items will be announced later.
Visible damage
The market has reacted negatively to these developments. Major stock indexes on the New York Stock Exchange, USA, all fell in the opening session on the morning of June 15.
The reason is that investor concerns have returned after the US officially announced its decision to increase tariffs on imported Chinese goods - a move that could push the already tense trade relationship between the two countries to a new level.
Although President Trump has downplayed the risk of a trade war, experts agree that the move to impose new tariffs will likely push the world's two leading economies to the brink of a trade war that markets and industry have long feared.
The market’s concerns are well-founded. These “tit-for-tat” measures do not help the parties erase their differences but only affect American and Chinese businesses.
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| Soybeans are one of the “victims” of the US-China trade war. This is bad news for the US agricultural industry and Chinese consumers. Photo: ABC news |
For example, American investors and businesses have already seen the negative impact. Cargill, the largest private US agricultural company, has called on Washington and Beijing to talk so that businesses, farmers and consumers do not get caught in a trade war.
Meanwhile, some major US companies such as Boeing said they were starting to assess the impact of China’s tariffs. Boeing, which earned about 12.8% of its total revenue in 2017 from China, has long been considered one of the US multinationals most vulnerable to an “all-out” trade war.
Boeing spokesman Charles Bickers assessed that any retaliation could impact the company's supply chain and commercial operations.
President Trump's dilemma
Despite high-level bilateral trade negotiations over the past month, it seems that the US and China are still at an impasse in finding a solution, or that the Trump administration is not satisfied with the agreement reached.
Dennis Wilder, head of the US-China relations program at Georgetown University, said this was a negotiation process in which the Trump administration believed that continuing to put pressure on Beijing would help Washington receive better offers in return.
According to some sources, at the trade consultation round earlier this June, the US delegation returned to Washington with a proposal from China to import an additional amount of goods worth nearly 70 billion USD from the US.
However, this proposal does not seem to meet the expectations of the Trump administration. Political factors also help Washington feel more confident in increasing pressure on Beijing.
After the historic summit between President Trump and North Korean leader Kim Jong-un in Singapore on June 12, the US realized that Beijing's mediating role was no longer as important as before as the US and North Korea made progress in establishing official communication. This could be considered a turning point in the US-China confrontation on trade.
US-China trade talks are in “chaos” as Chinese officials are uncertain about President Trump’s true intentions.
On the US side, there are still many issues that need to be re-evaluated regarding the decision to impose tariffs on imported goods from China. Because the analysis all points to the conclusion that imposing tariffs on China only accounts for a small proportion compared to the scale of the two largest economies in the world.
This means that even with high tariffs and discontent, the US will still find it difficult to force China to make complete concessions to President Trump's wishes, and it will even have a negative impact on the US and world economies. That is really a dilemma for President Donald Trump at this time.
