To top it all off, he insists that China withdraw its WTO complaint, afford the United States “fair, effective and non-discriminatory market access and treatment” (according to Trump’s standards of fairness), and endure these indignities without taking any retaliatory action against American goods. He further demands that China reduce its tariffs in “non-critical sectors” to a level no higher than equivalent US tariffs by 2020. He also wants the country to toughen up its anti-piracy regime. Aside from the aforementioned $200bn reduction of the US-China trade deficit, Trump wants China to eliminate “market-distorting subsidies”: government incentives that have helped push China forward in certain high-tech industries, like the production of electric cars. In response to this last move, and ahead of negotiations in Beijing at the beginning of May, Trump issued a raft of terms for ending the escalating tariff battle, which has been described as a declaration of fiscal warfare. The next day, China filed a complaint with the World Trade Organisation (WTO) and matched the Americans by threatening a 25 percent tariff on $50bn worth of US exports, particularly soybeans. This was followed by a threat from the Americans on 3 April to introduce new, 25 percent tariffs on 1,333 products (amounting to $50bn of annual imports), specifically targeting China’s intellectual property regime. This move was answered by China’s imposition of 15-25 percent tariffs on 128 products (including key American exports, like pork) on 2 April. The first shot was fired when Trump imposed a 25 percent import tariff on steel and 10 percent tariff on aluminum on 23 March from which the EU, Canada, Mexico, Argentina, Australia and Brazil are exempt until 1 June.
The US has been locked in tit-for-tat protectionist skirmishes with China for months. However, Trump’s bellicose behaviour risks further destabilising an already-precarious global economy.
He is predictably applying his particular art of negotiation: threaten, bully and bluster – then strike a deal. In a recent editorial for the Financial Times, associate editor Martin Wolf described US President Donald Trump’s latest plan to reduce the $337bn US-China trade imbalance by imposing $200bn worth of tariffs on Chinese goods (over two years) as a “crazy” act of “fiscal irresponsibility”. The serious representatives of capitalism are petrified that the ongoing trade dispute between China and America could erupt into a full-blown economic war.
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