President Trump has threatened to impose tariffs on nearly all Chinese products exported to the United States unless Beijing agrees to a range of trading concessions. In a dramatic escalation, his move could subject nearly all of the $505 billion worth of Chinese imports to tariffs.
In a White House statement on Monday, the President announced that he had instructed his chief negotiator, U.S Trade Representative Robert E. Lighthizer, to list over $200 billion worth of Chinese products that could be imposed with tariffs of 10 percent.
According to Trump, “the trade relationship between the United States and China must be more equitable”. In explaining his proposed actions, he added: “The United States will no longer be taken advantage of on trade by China and other countries in the world.”
Branded as “blackmail” by China’s Ministry of Commerce, Trump’s move has had an unprecedented impact on the Asian markets with Shanghai closing at 3.78 percent, its biggest drops in two years, and Shenzhen down 5.31 percent.
Fears of a full-blown trade war have heightened as China vowed to engage in retaliatory measures. According to Geng Shuang, a spokesman for the Chinese Foreign Ministry, “We don’t want a trade war, yet we are not afraid of a trade war”.
Analysis by Oliver Murphy- Editor
The visible aggression emanating from Trump is further evidence of the President’s desire to implement his “America First” trading strategy. However, whilst his latest announcement is bold, it is an unprecedented move that will undoubtedly expand the goods facing trade measures, ultimately impacting the consumer.
Despite his inconsistency in many other areas, he is a fervent and committed protectionist who has pledged to combat what he calls the unfair trading practises of other economies. Whilst his confrontational approach will certainly appeal to his supporters, it will hardly prevail in the complex sphere of diplomacy.
His latest move comes only a week after he threatened to impose tariffs on major U.S trading partners, including the EU, China, Mexico and Canada in an attempt to reshape the landscape of a global free trade system that he claims is “biased” against America.
Despite condemnation, President Trump’s criticisms of a prejudicial trading system are founded. According to the WTO, the average US tariffs (trade-weighted) are 2.4% percent lower than those in the EU (3%) and Canada (3.1%). If we are talking about creating a level playing field in terms of trade, then Trump is certainly entitled to voice his concern.
However, simply slapping tariffs on trading partners in a retaliatory tit-for-tat will only exacerbate the problem. The presidency of Barack Obama proves that tariffs are an invariable mistake. Indeed, look what happened when the former President imposed a 35% tariff on Chinese vehicle tyres in 2009. Whilst saving 1,200 jobs in the tyre industry, the tariff led to approximately 3,731 jobs lost in retail, and reportedly cost $1 million for every job it safeguarded.
Tempting as it is for Trump, upping the ante will – in the long run – be self-defeating. With this in mind, it would surely be better to greatly reduce tariffs not raise them.