New tariffs will hurt both the Americans and Chinese
Concessions are what it is looking for, the same tricks of the trade that helped power its growth story.
The US has raised the stakes in a dangerous trade war with China that's getting worse and could drag the world into the mess. The latest round of tariff of $200 billion on Chinese goods shows that Washington is going for broke. Within days, more than half of China's exports to the US and almost 85 per cent of US exports to China could be hit. What's particularly intriguing about the latest move is the timing. It comes just three days before the visit of Chinese Vice Premier Liu He to Washington. US Treasury Secretary Steven Mnuchin has been working for weeks to get the two nations to talk to defuse tensions, but President Donald Trump chose to do his thing against Beijing with a bout of arm-twisting ahead of the meeting. This makes us wonder if the primary goal here is to undermine China or address trade issues.
Beijing, however, has shown little interest in coming to the table, or lowering its guard and opening its doors to the West just as the West has done for China. Concessions are what it is looking for, the same tricks of the trade that helped power its growth story. It's hard for non-Chinese firms to gain access to its vast domestic market. And the ones who do barely manage get to run the show on their own terms. Google, Facebook, tech firms, automobile manufacturers have found the going tough. These unfair trade practices should be addressed through multilateral platforms such as the World Trade Organisation. But Trump has threatened to quit that, too. In a recent tweet, the US president said "China has openly stated that they are actively trying to impact and change our election by attacking our farmers, ranchers and industrial workers because of their loyalty to me. What China does not understand is that these people are great patriots and fully understand that..." The impact of a trade war or its futility can only be gauged in the homes of ordinary Americans and Chinese. Both parties are bearing the brunt of the tariffs. At the present rate, tariffs would cost an average American household $270 more annually. Politically, it could be a perilous road for the president as Americans head to mid-term polls in November. We'll then know who will throw in the towel.