Former President Donald Trump’s America First policy served as a strong warning to China. He is threatening to raise that tariff to 50% and applying that to all imports into United States if Beijing does not cancel its 34% counter-tariff. This potentially bellicose ultimatum comes on the heels of heightening trade tensions. These geopolitical tensions have already wreaked havoc, leading to steep declines in the world’s stock markets.
Trump made this tariff threat public, of course. Most importantly, he confirmed his administration’s desire to pursue both permanent tariffs and additional talks with China. As you might imagine, the announcement generated a flurry of immediate reactions. Asian share indexes took a nosedive on Monday, with Hong Kong’s Hang Seng index shedding more than 13%.
China exports everything from shoes to electronics to the United States. These are things such as electrical goods, machinery, computers, furniture, toys, vehicles and equipment. This export portfolio is increasingly crucial for the Chinese economy and increasingly substantial to overall trade with the two countries’ complex bilateral trade structure.
In retaliation for Trump’s earlier announcement that he would impose a new 34% tariff on imports from China, Beijing struck back on Sunday. In response, the Chinese embassy in the United States condemned Washington for “economic bullying.” Liu Pengyu, spokesperson for the embassy, argued that “pressuring or threatening China is not a legitimate way to conduct dialogue.” This feeling highlights the emerging hostility between the two nations as they work their way through an uneasy but inextricable economic partnership.
Should Trump follow through on his tariff threat, U.S. companies could face a staggering total tax rate of 104% on Chinese imports. This eye-popping figure raises serious concerns over how this unprecedented withdrawal will affect American businesses and consumers. Trump’s rhetoric has been assertive, declaring that “all talks with China concerning their requested meetings with us [on tariffs] will be terminated!” This assertion is emblematic of his administration’s maximalist take-it-or-leave-it stance on negotiations.
The current trade war has similarly captured the world’s attention. Ursula von der Leyen, president of the European Commission, has suggested a “zero-for-zero tariff” deal, aiming for mutual concessions in tariffs. Japan is sending their negotiation team to the U.S. to win a reprieve on tariffs. This decision tremendously signals that all nations are of the bent to settle trade disagreements in a dignified way.
Trump has consistently emphasized that the U.S. has numerous countries eager to negotiate fair deals, stating, “We have many, many countries that are coming to negotiate deals with us.” His administration’s broader approach seems to be putting Americans first at the center of trade talks, at the possible expense of using time-tested diplomatic strategies.
It is critical that both countries clearly announce their trade policy intentions as this situation unfolds. Second, they need to prevent or at least minimize the economic fallout that often results from long-term labor disputes. The stakes couldn’t be higher, as the effects of these tariffs could flow through global markets and affect economies all over the world.
“The US hegemonic move in the name of ‘reciprocity’ serves its selfish interests at the expense of other countries’ legitimate interests and puts ‘America first’ over international rules.” – Liu Pengyu