Editorial | Price of renewed US-China trade tensions could be loss of trust
Tariffs may not rise as high as before, but the real damage is that Beijing will find it harder to put faith in what Washington promises
However, it comes at a price that could weigh heavily on relations between the world’s two biggest economies – a loss of trust.
Trump’s flip-flops and usual tactics do not work with China. Beijing’s stance remains the same – any negotiation must be based on equal respect and mutual trust. The shock and awe of Trump’s global tariff war had the desired effect on many trading partners but not China. The initial impact diminishes with each new threat if it is not backed up with action.
The reality is that China was prepared for a worst-case scenario even in April, so it is not clear what Trump hopes to achieve with a new round of tariff threats now. Nor is it clear that top US officials are united in their views on how to deal with China. That reflects surprise over how far Beijing appears prepared to go over the rare earths issue.
Hopes that China will drop export controls on rare earths in exchange for access to the US market may overestimate its importance to China’s exports. Rare earths and critical minerals remain the most important card for Beijing to play, particularly when the US shows no signs of easing tech export controls. China is unlikely to give ground very easily.