Tensions teeter on trade war
Trade tensions between the United States and China were ratcheted up another notch yesterday and could turn into a full-blown trade war if the Trump administration follows through on its threat to impose $100 billion in new tariffs on Chinese imports, a former ambassador to China said.
“We cannot avoid damage to our own domestic interests by continuing down this road,” said J. Stapleton Roy, who was the U.S. ambassador to China for four years, appointed by President George H.W. Bush. “The fact that the United States is making a bigger issue of the trade relationship with China does not strike me as wrong, but the measures they’re using to address this are gravely flawed.”
Yesterday, a spokesman for the Chinese Commerce Ministry said the country will “counterattack with great strength” if the Trump administration follows through with its plans for an additional $100 billion in tariffs.
Markets sank yesterday on concerns that the trade conflict may be escalating rather than dying down, with the Dow Jones industrial average falling more than 572 points and more than 2 percent.
Thursday, Trump said he asked his trade representative to come up with a list of tariffs on Chinese imports totaling $100 billion.
Trump’s new tariffs have not been finalized, but if they go into effect it could spark another round of trade fights.
“It’s very possible given how erratic the administration’s policies are that this could keep cascading down into a situation where things get much worse,” said Michael Klein, a professor at the Tufts Fletcher School and creator of econofact.org.
The announcement comes after the countries traded tariff barbs earlier in the week, with both nations announcing $50 billion in new tariffs.
China’s new tariffs included many that were carefully targeted at the U.S. agriculture sector, including soybeans, beef and cranberries. The move was almost certainly meant to hit part of Trump’s base of support, Roy said.
“I think they have studied this issue carefully,” he said.
Yesterday, Treasury Secretary Steve Mnuchin said the U.S. is trying to avoid a trade war, saying, “We absolutely are willing to negotiate and not get into trade wars. But on the other hand, the president is perfectly willing to defend (the country’s) interests.”
Roy said it was always close to a guarantee that China would reciprocate with its own import taxes.
“It was absolutely certain,” he said. “Both sides cannot avoid being hurt by a trade war between the two, and in my judgment the hurt to both sides would be substantial.”