US and China dig in for trade war
WasHiNGTON: The trade war between the world’s two biggest economies is taking on a life of its own.
When President Donald Trump first threatened to slap tariffs on Chinese goods in March to punish Beijing for stealing American intellectual property, trade experts warned the two nations risked slipping into a downward spiral of tit-for-tat trade actions. The global economy now appears to be living that reality, with the trade war settling into a regular rhythm of counterblows.
The latest shot came Friday, when China released a list of US$60bil in US goods that Beijing intends to hit with tariffs in retaliation for Trump’s plan to impose duties on US$200bil in Chinese imports. While the Chinese threat isn’t proportional in absolute dollars, it’s actually an escalation on a relative basis, given that China buys less from the US.
Within hours, White House economic adviser Larry Kudlow promised Trump wouldn’t back down until China changed its trade practices. “Don’t underestimate President Trump’s determination to follow through,” Kudlow told Bloomberg Television.
On Saturday, Trump repeated his assertion that the strategy is succeeding.
“Tariffs are working far better than anyone ever anticipated,” Trump in a series of four Twitter messages. “China, which is for the first time doing poorly against us, is spending a fortune on ads and PR trying to convince and scare our politicians to fight me on Tariffs -- because they are really hurting their economy.
“We are Winning,
Trump added.
William Reinsch, a trade expert at the Center for Strategic and International Studies who worked at the Commerce Department during the Clinton administration, said the Trump administration keeps “digging the hole deeper, violating the first rule of holes, which is when you’re in one, stop digging.”
Amid the more heated rhetoric, US stocks ended the week up about 0.8%, the fifth straight week of advances. The Chinese equity market this week slumped 5.9%, the steepest drop since February. Trump suggested that the market decline is getting China’s leaders back to the table for talks.
Hopes had been rising that Trump might drop his trade-war campaign, after the president announced a deal last week with European Commission president Jean-Claude Juncker that would see the US and EU cut tariffs and other barriers. but must be strong!”
There are also signs the Trump administration is trying to revive formal negotiations with Beijing. There’s “some hint” the Chinese may be warming to the idea, and recently there’s been some communications at the highest levels of both governments, Kudlow said. A White House spokeswoman said the administration remains open to further talks.
China so far has shown little sign of backing down. At a regional security forum in Singapore on Saturday, Foreign Minister Wang Yi said free trade had been dealt a “heavy blow,” and defended his country’s actions.
“These measures were taken out of consideration for the interests of the Chinese people and to upholding the World Trade Organization-centered free trade regime,” he said. Finding common cause with Europe is one thing. America’s differences with China, a one-party state that’s promised to open its markets gradually, run deeper.
US Trade Representative Robert Lighthizer last week called trade tensions a “chronic problem” that would likely take years to resolve. Kudlow cited state subsidies and forced technology transfers as behaviors that the Trump administration wants China to end. — Bloomberg