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Abacus | A deal on tariffs won’t end the US-China economic cold war
- A recent US edict requiring a licence for sales to Chinese semiconductor manufacturer Fujian Jinhua shows the trade war goes far beyond tariffs
- But there are ominous implications for the world as the two countries move closer to all-out protectionism
Reading Time:4 minutes
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Hopes are riding high that Donald Trump and Xi Jinping will strike a deal on trade tariffs when they meet in Buenos Aires at the end of this month.
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On Thursday, the US president tweeted that he had just had “a long and very good conversation” on trade with his Chinese counterpart. And on Friday, the Bloomberg news service reported that Trump had ordered officials to draft an agreement to present to Xi in Argentina.
But even if the two leaders do manage to agree to scrap punitive duties on each other’s goods, a tariff truce will do little, if anything, to bring peace in the rapidly escalating economic cold war between the United States and China – because their dispute goes far beyond tariffs.
That was made clear last Monday, when the US Commerce Department announced that American businesses would require a special licence to export all “commodities, software and technology” to Chinese semiconductor manufacturer Fujian Jinhua Integrated Circuit.
And just in case anyone should be in any doubt, the Commerce Department statement added that “such licence applications will be reviewed with a presumption of denial”.
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