SOURCE: https://www.theguardian.com/business/blog/live/2019/may/10/us-china-trade-war-tariffs-deadline-talks-stocks-market-business-live
Backdoor Tariffs Trip US-China Trade Talks
I’ve made no secret about my interest in how countries govern themselves. Like many others I have
been watching the economic sword-play between Donald Trump and China’s Xi Jinping.
Mr Trump says he sees no need to rush on a trade deal. In the meantime he’s raised the tariffs on
$200bn worth of Chinese goods from 10% to 25% overnight. Goods that have already left China will
apparently be spared the tax increase. But in what way is this good negotiation – when a tariff increase
is imposed under cover of darkness and without warning? And just how is that meant to move both
nations towards a trade deal?
The China-US relationship, if it can be described as such, is more commonly referred to by the media as a trade war.
There were hopes that Donald Trump and Xi Jinping could reach a deal in talks that would take the heat out of the trade debate. Wall Street, for one, is less than impressed with this latest step by its country’s president.
Trump’s lack of urgency and his brushing off of questions around progress with a remark about talks being ‘very congenial’ is not winning him any favours with the country’s financial institutions.
The increase came into effect (Friday) on a long list of products shipped after 12.01am EDT and Trump further warned 25% tariffs could be imposed on another $325bn of goods in future, which would mean all Chinese imports being covered by tariffs.
China is still considering its position. A little while after the tariff increase came into effect, China’s commerce ministry said it “deeply regrets” the need to take “necessary countermeasures”.
It is an unequal battle. China’s imports from the US are under $200bn, so introducing its own tariffs won’t carry much weight. China has also said it still hopes both sides could reach an agreement.
The impact of the China tariffs have however had an impact closer to home with domestic stock markets seeing a major selloff. On Tuesday, the Dow Jones industrial average had its worst one-day drop since January.
At the heart of the trade war is Trump’s “America first” policy which, he says, will protect the US’s position as the world’s leading economy.
Trump presents his China strategy as something positive for US workers (and voters). It will bring back employment to “rust belt” industrial areas that have lost jobs to China, he says.
It is more likely that tariffs will mostly be passed on via higher prices – ultimately paid by those same workers.
In the meantime the talks go on, but one wonders how much store the Chinese leader and his representatives will put in Trump’s word around the negotiating table when these kind of tactics are brought into play.
Trade is business. I have worked and lived in China and I understand how business is done there. Respect is the number one priority, as is an understanding of the culture. Yes, it takes time to learn these; how another culture and foreign business practices work – but it is always worth doing. It’s not about humility or backing down, it’s about good business getting the best results. Surely that has to be worth it?
