Sino File | Has Trump tweeted us back to the cold war? Here’s how a US-China trade skirmish could unravel
We’ve been here before with Soviet Russia and everyone knows how that ended. This time though ...
Unfortunately, the entrepreneur turned US president – who cares little for rules anyway – has already fired the first shot of this war, targeting China’s trade and economic policies.
In the most significant of a series of trade measures undertaken by the US administration, Trump’s decision to levy a 25 per cent tariff on roughly 1,300 Chinese goods – worth an estimated US$60 billion – aims to punish China for what he claims are predatory practices regarding intellectual property theft and forced technology transfer. That move followed a six-month Section 301 investigation.
Taiwan: a pawn in Trump’s plan to take on China in everything
Trump has also directed the Department of the Treasury to come up with restrictions on Chinese investment in the United States.
But the launch of Trump’s long-promised anti-China tariffs will inflict as much pain on the US economy – specifically on American consumers and exporters of Chinese goods – as they will on China itself.
So far, China’s response has been more symbolic politically than substantive economically. Beijing has rolled out US$3 billion worth of additional tariffs on US goods, mostly targeting farm products, following earlier US tariffs on aluminium and steel imports.
Beijing is carefully calibrating its message – that it will stand up to the US, while refraining from escalating the spat into a confrontation that could threaten the world’s most important bilateral relationship in terms of the world economy.