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China and the US are at risk of renewing a full-scale trade war unless the two biggest economies can ease the dispute before China’s tariffs on US $14 billion exports, analysts warned .
President Donald Trump announced a 10% tariff on Chinese goods last week, forcing Beijing to tackle fentanyl-related exports, further threatening if China retaliated.
When the US duties came into effect three days later, Beijing quickly fought back, announcing 10-15% of the duties on US energy exports and agricultural equipment. China’s obligations are expected to come into effect on Monday.
“This could only be the beginning of this phase of the trade war,” said Zhang Yanshen, an expert at the China Centre for International Economic Exchange. “This can be a very bad situation.”
Some analysts hoped that the US and China would hold talks to avoid major trade hostility. Trump initially expected to speak to President Xi Jinping, but after China retaliated, he was “no rush” and tariffs were “opening salvo” with “very important” measures. I stated.
He was asked if the Trump team is involved with China in the same way they went to Canada and Mexico. This was subject to higher tariffs before Trump gave him a month’s reprieve. Our counterparts are both Beijing and here in Washington.”
A spokesman for the Chinese Embassy in Washington said that since China announced retaliatory tariffs, “there was no new developments.”
Beijing experts said Trump’s shocking tactics aimed at enforcing XI to quickly reach the deal may have backfired. The US President only provides two days to announce and implement tariffs. This is a timeline that is probably not acceptable to XI.
“China does not want that kind of transaction,” said Ma Wei, a researcher at the American Institute of Research, affiliated with the Chinese government. “You must have equal consultation and equal agreement, not to put high tariffs on me first, and you say we have to make a deal. ”
Ma said that the US tactics had an echo of the Chinese idiom “Cheng Xia Zhi Meng” that was done to deal with your enemies under obsession while at the gates of your castle.
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However, analysts suggested that China’s limited scope of retaliation, including anti-trust investigations into Google and Nvidia, hit goods that were narrower than US taxes, but could not negotiate. He pointed out.
Trump administration officials stressed that the US president wanted China to stop the flow of fentanyl, a deadly opioid that has become the leading killer of Americans between the ages of 18 and 45.
However, Beijing experts have demanded other aspects of cooperation, such as Trump putting pressure on Russia over the invasion of Ukraine, and have given American buyers the ownership of the short video platform Tiktok. He said that consultations may have stagnated as they had requested cooperation in other areas.
“Fentanyl is an easy problem to deal with. China is already working with the US on this,” said John Gong, a professor at the International University of Business and Economics. “So Trump probably wants more of something that they can’t talk about publicly.”
Trump on Friday said he will announce “mutual tariffs” in the country next week but did not provide information on which countries will be targeted. The White House temporarily suspended late Friday with a so-called exemption from tariffs on low-cost shipments from China.
Wendy Cutler, trade expert and vice-president of the Asian Association Policy Institute, said China will play a longer game, unlike Canada and Mexico.
“Beijing is likely to take a waiting approach before considering engagement, with certainty about whether additional mutual, departmental or universal tariffs will have further impacts. There is,” Cutler said.
Chinese experts said it would be difficult for Beijing to reach a “magnificent bargain” on a short deadline. Especially on troublesome subjects such as the Ukrainian War, where the US accused China of helping Russia.
A recent UC San Diego expert and a Chinese Diplomatic Forum Council said Beijing is more concerned about US technology export control than tariffs.
China is also ready to tolerate tariffs, Gong said. Exports to the US accounted for 15% of China’s overall trade last year, with a smaller share than in the past.
“The Chinese government’s position on these tariffs may be ‘that’s that’s it,” Gong said. “Anyway, the majority of that is paid by American consumers, and many Chinese companies have already moved some of their operations overseas. Tariffs are, in the form of lethal weapons that Washington perceives. there is no.”
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However, some economists believe that the full power of Trump’s threatened tariffs, such as the 60% tax proposed during the presidential election, will hit the Chinese economy hard.
Hui Xiang, Chinese economy prime minister for Goldman Sachs, estimated that a 20% point increase in US tariffs would knock 0.7% point from China’s GDP growth.
Beijing could offset some of the blow with currency depreciation, consumer stimulus packages and other means, but will absorb a hit of around 0.2 percentage points in GDP growth, she said I did.
