The cost of the China–U.S. trade war

Con­se­quences of the trade war for Amer­i­can con­sumers.

Vocable (All English) - - Édito | Sommaire - ROBYN DIXON

Last Septem­ber, Don­ald Trump an­nounced new cus­toms and trade tar­iffs on 200 bil­lion dol­lars worth of prod­ucts im­ported from China. Bei­jing re­sponded with tar­iffs on 60 bil­lion dol­lars of Amer­i­can goods. These moves mark a new phase in the trade war un­leashed by the U.S. pres­i­dent this year. What will the con­se­quences be for Amer­i­can work­ers and con­sumers?

Bei­jing— The shelves of Bei­jing’s lux­ury super­mar­kets are crammed with fa­mil­iar prod­ucts that Amer­i­can ex­pa­tri­ates can­not seem to do with­out, from break­fast ce­re­als with just the right level of sugar and crunch to smoky salted nuts and clean­ing prod­ucts with the cor­rect amount of oomph.

2. But West­ern­ers — the main cus­tomers in super­mar­kets like Jenny Lou’s, Jenny Wang and April Gourmet — will have to pay more for a taste of home, ac­cord­ing to Jenny Lou’s man­ager, Rocky Jia, with Pres­i­dent Trump mov­ing for­ward with stiff new tar­iffs, the lat­est round of which, af­fect­ing $200 bil­lion worth of goods, was an­nounced [on Septem­ber 17]. China vowed to re­tal­i­ate with tax in­creases on $60 bil­lion worth of U. S. im­ports, in­clud­ing cof­fee, honey and chem­i­cals — and an­a­lysts pre­dict a long, un­cer­tain bat­tle ahead.

3. Some fa­mil­iar prod­ucts, like cer­tain Oreo cook­ies and Skippy peanut but­ter, are pro- duced un­der li­cense in China and would prob­a­bly not go up in price. But many oth­ers are im­ported and likely to see steep markups, Jia said. In super­mar­kets of such Bei­jing neigh­bor­hoods as San­l­i­tun, rem­i­nis­cent of the U. S. or Eu­rope with its bars, eater­ies, shop­ping malls and tree-lined streets, some Western cus­tomers said they would not be cowed by price hikes.

4. De­spite the brand loy­alty of many cus­tomers, Jenny Lou’s, which im­ports about 30 per­cent of its stock from the U. S., is brac­ing for a big im­pact on prices and prof­its. The su­per­mar­ket chain launched in 1988 and has 10 stores, with al­most three-quar­ters of its prod­ucts from over­seas, Jia said. Although some West­ern­ers say they would con­tinue to buy their fa­vorite Amer­i­can wares, Jia said that if prices rose steeply, some would prob­a­bly choose sim­i­lar prod­ucts man­u­fac­tured in Eu­rope.

AT STAKE

5. Many U. S. com­pa­nies do­ing busi­ness with China are fac­ing sim­i­lar painful choices in com­ing months. “My sense in com­mu­ni­cat­ing with peo­ple in the Chi­nese and U. S. gov­ern­ment is that both sides are hard­en­ing their po­si­tions and that nei­ther is will­ing to take the kind of uni­lat­eral ac­tion that would re­solve the sit­u­a­tion,” said Ja­cob Parker, vice pres­i­dent of China op­er­a­tions at the U. S.- China Busi­ness Coun­cil. “The U. S. gov­ern­ment is wait­ing for the Chi­nese gov­ern­ment to show good­faith ef­forts such as an­nounc­ing (that it is) im­ple­ment­ing new lib­er­al­iza­tions that al­low China to op­er­ate more like a mar­ket econ­omy. “China views those lib­er­al­iza­tions as ne­go­ti­ated bar­gain­ing chips that it will not give up uni­lat­er­ally.”

6. The Trump ad­min­is­tra­tion wants China to stop re­stric­tive trade prac­tices, such as forc­ing for­eign com­pa­nies to hand over key tech­nolo­gies in re­turn for ac­cess to China’s vast mar­ket. It also wants fun­da­men­tal longterm changes, de­mand­ing that China op­er­ate more like a mar­ket econ­omy, less re­liant on sub­si­dies to state firms that make it dif­fi­cult for out­side com­pa­nies to com­pete. But the more the trade war piles pres­sure on Chi­nese leader Xi Jin­ping, the less will­ing he may be to cave in, be­cause it would mean hu­mil­i­a­tion and loss of face. An­a­lysts warn the trade war is likely to be pro­tracted and painful.

RISKS FOR U.S. COM­PA­NIES AND CON­SUMERS

7. While China is un­able to match the U. S. dol­lar amount on tar­iffs be­cause it im­ports less from the U.S. than it ex­ports, it has myr­iad ways to make Amer­i­can com­pa­nies, con­sumers and farm­ers feel pain. China is an im­por­tant mar­ket for U.S. cher­ries, for ex­am­ple, and China not only tar­geted cher­ries with tar­iffs but also im­posed a new week­long quar­an­tine pe­riod, enough to make fruit spoil. Tar­iffs alone cost North­west cherry farm­ers at least $86 mil­lion this past sum­mer ac­cord­ing to the North­west Hor­ti­cul­tural Coun­cil.

8. Im­ported Amer­i­can cars in China are sub­ject to a 40 per­cent tar­iff, mak­ing it im­pos­si­ble for them to com­pete with im­ported Euro­pean cars that face a 15 per­cent tar­iff. Parker said a wide range of U. S. com­pa­nies face costly in­spec­tions, de­lays and reg­u­la­tory scru­tiny. One car man­u­fac­turer re­cently saw its ran­dom in­spec­tion rate jump from 2 per­cent to 100 per­cent, he said. Closed in­ves­ti­ga­tions into the prices Amer­i­can com­pa­nies were charg­ing have been abruptly re­opened. Even ad­ver­tis­ing slo­gans, used for years, were sud­denly be­ing ques­tioned. “We feel that there’s enough anec­do­tal ev­i­dence to in­di­cate that there’s some­thing of a trend hap­pen­ing,” Parker said.

9. An­other risk is that om­nipresent busi­nesses such as Star­bucks, McDon­alds and KFC could face a con­sumer boy­cott. Both coun­tries ap­pear to be­lieve they will win the trade war. Chi­nese state me­dia commentaries say the econ­omy is strong enough to out­last the U. S. Trump, mean­while, said [on Septem­ber 18 that] the U. S. might slap tar­iffs on an­other $267 bil­lion in Chi­nese goods. “We don’t want to do it, but we prob­a­bly — we’ll have no choice,” he said.

Both coun­tries ap­pear to be­lieve they will win the trade war.

10. Chi­nese Com­merce Min­istry spokesman Gao Feng said that the U. S., seek­ing to make China a scape­goat for its own prob­lems, had started a trade war that would un­der­mine world trade and harm its trad­ing part­ners. He said China would pur­sue a range of mea­sures in re­tal­i­a­tion, with­out de­tail­ing what would be done apart from rais­ing tar­iffs. “China has made full prepa­ra­tions to de­fend the in­ter­ests of the na­tion and the peo­ple,” Gao said.

(Tri­bune News Ser­vice)

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