Macroscope | Will the trade war force China to fold? The US’ confidence may be misguided

There is speculation in Washington that the Trump administration will raise tariffs on US$200 billion of Chinese imports to 25 per cent from 10 per cent, upping the ante again in an ongoing trade war poker game. Washington’s raising of the stakes suggests the White House feels it’s holding a winning hand. Or is it just bluffing?

“Tariffs are working far better than anyone ever anticipated. China market has dropped [27 per cent] in last [four months] and they are talking to us,” Trump tweeted on Saturday, adding that “Our market is stronger than ever”.

As US Commerce Secretary Wilbur Ross told the Fox Business Network on Thursday, the deployment of tariffs is intended “to try and convince the Chinese to modify their behaviour” and that the United States has “to create a situation where it’s more painful for them to continue their bad practices than it is to reform them”. That Beijing would reject the idea that China is applying “bad practices” wasn’t something Ross addressed.