Don­ald Trump’s trade tac­tics may back­fire

The Phnom Penh Post - - OPINION -

THE oceanic wa­ters get chop­pier still with the re­newed trade of­fen­sive by US Pres­i­dent Don­ald Trump.

It may not be a full-scale trade war quite yet, but Trump has def­i­nitely ratch­eted up the pres­sure with the an­nounce­ment that the White House will im­pose new tar­iffs on Chi­nese im­ports worth $200 bil­lion, and an­other $267 bil­lion if Bei­jing made any at­tempt to re­tal­i­ate.

It would be pre­sump­tu­ous at this junc­ture to rule out a reprisal from across the seas in the man­ner of the US com­merce sec­re­tary, Wil­bur Ross, who is re­ported to have re­marked that China is “out of bul­lets”. Not quite. More ac­cu­rately, there is no so­lu­tion and the dis­pute could linger for 20 years, in­deed the mis­giv­ings ex­pressed by bil­lion­aire Jack Ma.

As the po­lit­i­cal storm gath­ers and Amer­ica gears up for cru­cial midterm elec­tions, there is lit­tle or noth­ing that can be ex­pected at the bi­lat­eral talks that are sched­uled to be held this month.

The eco­nomic tus­sle be­tween the two gi­ants is ever so strained. Pres­i­dent Trump ap­pears to be de­pend­ing on the in­creased an­tag­o­nism to­wards China across the po­lit­i­cal spec­trum, a feel­ing that has been prompted by its eco­nomic poli­cies and the man­ner in which Bei­jing is ex­er­cis­ing its in­creased strength un­der the Pres­i­dent-for-life, Xi Jin­ping.

Be­yond the ap­par­ent dis­pute over spe­cific tar­iffs, the dif­fer­ences be­tween Wash­ing­ton and Bei­jing re­late to the way the Chi­nese state sup­ports its cor­po­rate en­ter­prises and in­ter­venes in the econ­omy, at the cost of for­eign com­pa­nies. Even if re­form- ers in the coun­try be­lieve that changes are needed for their own sake, Bei­jing will scarcely rush to ef­fect a po­lit­i­cal as well as eco­nomic over­haul. China’s ap­proach has thus far been mea­sured.

In the im­me­di­ate after­math of the mea­sures, Bei­jing has an­nounced counter-tar­iffs on US im­ports worth $60 bil­lion – at a lower rate than pre­vi­ously listed. It has couched its move with the as­sur­ance that it is a “forced re­sponse”.

China is acutely aware of the po­ten­tial reper­cus­sions of its counter-of­fen­sive not least be­cause of the dis­agree­ment over how to han­dle the is­sue.

In­deed, at­tempts to make progress with more sym­pa­thetic US in­ter­locu­tors have proved point­less be­cause of the di­vi­sions within the Trump ad­min­is­tra­tion. China ex­ports around four times as much to the US as the US does to China, so is run­ning out of goods to tar­get.

Amer­i­can and Chi­nese busi­ness en­ter­prises and con­sumers will not be the only ones to pay for this con­flict. Japan, which has its own dis­agree­ments with China, has called for a swift res­o­lu­tion for fear of its im­pact. Ce­cilia Malm­strom, the Euro­pean Union’s trade com­mis­sioner, has said it agreed with some of the US com­plaints but not its tac­tics.

Any se­ri­ous at­tempt to ad­dress Chi­nese trade poli­cies will re­quire a mul­ti­lat­eral ap­proach and con­sid­er­able pa­tience. Nei­ther is as­so­ci­ated with Trump.

As Gabriel Gar­cia Mar­quez once wrote so fa­mously, “it is eas­ier to start a war than to end it”.

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