Negotiation, not useless tariff threat, is way forward
US President Donald Trump and Commerce Secretary Wilbur Ross both tried to calm the panic about a possible trade war on April 4, just hours after China slapped 25 percent tariffs on $50 billion (41 billion euros; £36 billion) in imports from the United States, including soybeans, whiskey, cars and planes.
Trump tweeted on the morning of April 4 that “we are not in a trade war with China”, while Ross told CNBC that he expects trade actions between the two countries will likely lead to a negotiated deal. Larry Kudlow, director of the White House National Economic Council, indicated it’s possible that Trump’s tariffs are a negotiating tactic and won’t go into effect.
If this were the case, then Trump has already proved himself wrong, because China has demonstrated that it can’t be coerced and is fully determined to reciprocate, as reflected in both the Section 301 and the Section 232 cases. Wielding a big tariff stick won’t gain US more leverage at the negotiation table.
By threatening protectionist tariffs, Trump has caused a major disruption in the global trading system and also put Americans in harm’s way. US consumers, farmers and bluecollar workers, many of whom voted for Trump, have been hurt already as a result of the tariff war triggered by the Section 232 steel and aluminum tariffs. The damage will be much bigger if the tit-for-tat tariffs sparked by the Section 301 case take effect.
China has long called for negotiations to resolve bilateral trade and investment issues. So if the Trump administration is open to negotiation, as it indicated, it should immediately stop the tariff stick and start negotiations with China.
Negotiations, whether through the China-US Comprehensive Economic Dialogue, the Joint Commission on Commerce and Trade or other platforms, will be a much better way to address each other’s concerns than threatening a titfor-tat tariff war.
Yes, negotiations may not be a smooth process and will not solve all the problems or solve them in a short period of time. That is just the nature of many complicated issues in big countries like China and the US.
China has long called on the US to loosen and lift its restrictions on US high-tech exports to China. The US has not only failed to address it effectively, but rather moved in the opposite direction, with more discriminative policies against China, both in trade and investment.
And it’s impossible for the US to demand that China, the largest developing country, solve its problems overnight, even if it’s in China’s best interest.
What is important is that China is moving in the right direction. It has been steadily improving its protection of intellectual property rights, a key element for China to move into an innovation-driven society.
Chinese leaders have pledged further reform and opening-up. President Xi Jinping is expected to roll out new reform and openingup measures at the Boao Forum for Asia to be held in Hainan Island from April 8 to 11.
After all, this year marks the 40th anniversary of China’s reform and opening-up drive, which has brought phenomenal progress in China and also benefited the whole world, including the US. It’s in China’s own interest to continue to reform and open up.
So it’s really time for Trump to give up the useless tariff weapon and come to the negotiation table.