Chinese President Xi Jinping has won the first round in the protracted battle against Donald Trump over his declaration of tariff war against China. After waiting for long three weeks for a personal call from XI Jinping offering talks to discuss the proposed tariff hikes, Trump partially retreated on Tuesday when he told newsmen in White House that high tariffs on goods from China’ will come down substantially but it won’t be zero”.
This tone was a big climbdown from the U.S. President’s aggressive tone against China on April 2 and also on April 9 when he announced the pause of 90 days in his reciprocal tariff hikes decision. The earlier retaliatory mood was not there during the briefing. Trump said “We are doing fine with China” and he would not like to do a hardball with the Chinese President Xi Jinping.
What is the significance of this climbdown by Trump towards Xi Jinping? First his observations are indication of an appeal to President Xi for discussions on arriving at an agreement on tariff hike on Chinese goods being imported by USA. China was never reluctant for a dialogue, even the senior Chinese trade officials earlier indicated that instead of unilateral declaration, Trump could have started the process of bilateral discussions. Further, there were indications from China that they were ready for some tariff hike by the U.S. but that had to be decided by mutual discussions taking into other factors including the U.S. export of goods to China.
Trump placed import taxes of 145% on China, which has countered with 125% tariffs on US goods. Trump has placed tariffs on several dozen countries, causing the interest rates to increase on US debt as investors worry about slower economic growth and higher inflationary pressures. Trump’s key advisers who were earlier went for Trump’s total tariff war, reassessed the situation late last week and it was felt that the present level of escalation of trade war with China was not sustainable and it would damage the U.S. economy more than that of China. Further, the advisers, especially Treasury Secretary Scott Bissent noted that Xi Jinping had launched an all out campaign among the U.S. friendly nations against Trump’s tariff war which may adversely impact relationship of these nations with the United States. The general view was for making efforts to defuse the heat over China and facilitate a discussion without compromising on the tenor of the tariff policy.
Trump has shown no public indications that he plans to pullback his baseline 10% tariff, even as he has insisted he’s looking for other nations to cut their own import taxes and remove any non-tariff barriers that the administration says have hindered exports from the US. China has also not been included in the 90 day pause category of states. China has warned its trading partners that they could not conclude deals with the United States at the cost of Chinese interests. This means that the countries using Chinese equipment in their products cannot export those finished products to USA. This applies in the case of India also which uses a lot of Chinese equipment in its export products. China is closely monitoring the trade talks, currently on between India and the U S.
On Tuesday Korean media reports suggested Beijing is now putting its own pressure on third countries to enforce Chinese restrictions on US sales. The Korea Economic Daily reported that some Korean companies had received letters from the Chinese government, warning of “retributions” if they exported any products to US military contractors which contained Chinese critical minerals.
According to the Chinese official daily Global Times, the latest response of the Trump administration is within expectations, indicating that it is beginning to realize that its tariffs can hurt others but harms the US itself, Lü Xiang, an expert on US studies and a research fellow at the Chinese Academy of Social Sciences, told the Global Times on Wednesday.
Two Nobel laureates in economics – Vernon Smith and James Heckman, along with other economists and scholars, have initiated an Anti-Tariff declaration on the website anti-tariff.org, encouraging more people to sign up and jointly reject the tariffs, according to media reports.
“The current administration’s tariffs are motivated by a mistaken understanding of the economic conditions faced by ordinary Americans. We anticipate that American workers will incur the brunt of these misguided policies in the form of increased prices and the risk of a self-inflicted recession,” read the statement.
According to Chinese foreign policy experts, despite the US seemingly softening tone,” we should be cautious that it’s only technical strategy adjustment in the context of new global trade trends, while the US goal of containing and suppressing China will not change,” noting that the US has reduced its credibility with back-and-forth on tariffs. The Chinese view is that if the U.S. truly wants to resolve the tariff issue through dialogue, it should stop using pressure and threats and blackmail and instead opt for negotiations on the basis of due respect and equality.
Trump has made a tactical retreat but he must have his game plan. But one geo political reality has been vindicated that China and only Chinese President has the guts to meet the challenge of the present number one super power USA. China has advanced a bit to bridge the gap through the tariff war. The U.S.- China battle will be long drawn with its ups and downs. Now the main issue is when Trump is finally meeting Xi Jinping to discuss the tariff rates? (IPA Service)
