Tariff escalation can only cause harm
DESPITE the global outcry, Washington has just amped up its rhetoric and ramped up its tariffs against China yet again.
In a statement issued Monday, US President Donald Trump said his government would impose a 10 percent tariff on roughly US$200 billion of Chinese imports from September 24 and expand the levy to 25 percent from January 1.
Part of Washington’s rationale for this is the belief that its tariff tactics will have severe consequences for the Chinese economy — forcing China into more concessions — only to play into Washington’s hands.
However, this US assumption is based on a lack of understanding of China’s economy and policies.
With an annual decline in the value of foreign trade to China’s economy, China is consolidating the fundamental role that domestic consumption plays in its growth.
In the first half of 2018, China’s gross domestic product increased 6.8 percent, overshadowing that of most major economies in the world. Domestic consumption contributed 78.5 percent to the growth rate.
Meanwhile, Beijing is continuing to steadily promote a reform and openingup and adopting measures to stabilize the market.
China’s stable environment for foreign investment, measures to facilitate business and transparent policies along with a vast consumer market continue to make it a coveted target for global businesses, all adding to its confidence in confronting Washington’s unilateral and protectionist moves.
China’s policies on trade facilitation and investment liberalization, in sharp contrast to the US strategy, have been well received around the globe.
US multinationals such as Tesla and ExxonMobil have announced huge investment programs in China recently, casting ballots of confidence in favor of Beijing.
In fact, Washington’s approach of imposing tariffs will not solve the China-US trade issue, but harm the interests of US businesses and consumers instead and add downside risks to the global economy.
The latest report by the American Action Forum, a Washington-based nonprofit organization, showed that the upcoming tariffs could raise overall costs for both US consumers and businesses by roughly US$19.7 billion per year.
In a letter to the US Trade Representative by 150 industrial associations earlier this month, the organizations representing agriculture, retailers, manufacturers, technology and other industries say that “continuing the tit-for-tat tariff escalation with China only serves to cause more harm to US economic interests, including farmers, families, businesses and workers.”
On the ground, unilateral tariff onslaughts have never prevailed in US history. It is time for the Trump administration to take a rational approach to China-US trade relations and frictions and engage with China as an equal partner to solve trade-related issues.