What effect will Trump's China tariffs have?
US President Donald Trump has announced new tariffs to the tune of 200 billion dollars on Chinese goods, further escalating the trade dispute. The move means around half of all imports from China will be subject to tariffs. Commentators believe that the tough line could well be successful.
Beijing has more to lose
The row between the US and China reminds Polityka of the game of chicken, when two cars race towards each other:
“Only that Trump is sitting in a big American SUV while the Chinese are in a hatchback. Trump has his foot to the floor and the Chinese aren't easing up either, but they know that they have more to lose. ... The Chinese government fears tariffs could lead to a permanent reduction in production potential, as a number of US companies could decide to change their suppliers. To cushion the impact of the tariffs, Chinese companies could shift production to other countries, which would have a negative impact on employment. Trump is counting on Beijing making concessions for fear of such a scenario. For now, however, the game of chicken goes on.”
No trump card up its sleeve
Beijing has little means of opposing Washington, Jornal de Negócios agrees:
“The main reason for that is above all the trade imbalance: China exported goods worth 505.5 billion dollars in 2017 and imported goods worth 129.9 billion. Devaluing the yuan in relation to the dollar so as to cut tariff costs and boost Chinese exports is also impractical since it would entail an increase in import costs, the risk of inflation and capital flight for China. By the same token, selling US bonds as a coercive instrument against Washington is also no solution for China (with 1.19 trillion dollars the biggest investor in US bonds), since it would lower Beijing's currency reserves and raise its debt servicing costs.”
Trump's voters will have to foot the bill
Trump's ignorance when it comes to economics is astonishing, Tageblatt comments:
“For example he won't accept that his penal tariffs won't hurt Chinese manufacturers but US end-consumers, and only them. Which will lower the living standards of the socially disadvantaged classes from which Trump recruits his most fervent and blindest supporters. The Chinese plastic junk from the discounters will become more expensive precisely for those who can least afford such price hikes.”
US not immune to effects of its own tariffs
Ria Novosti also doesn't believe that the US can afford such a trial of strength in the long run:
“If the trade war continues and the list of tariff items grows longer, Trump will soon be unable to ignore the political consequences of his actions: the economic growth that fans of US economic policy so love to laud will be short-lived. ... The profits of US carmakers like Ford and General Motors are already suffering due to the tariffs on steel and aluminium. And the Trump administration has been forced to ease the sanctions on the Russian holding company Rusal to avoid an explosion in the price of aluminium on the domestic market.”
Table-banging could work this time too
The aggressive stance of the US government could make China relent, The Times counters:
“If Trump the dealmaker gets his way, China can be forced to cut its tariffs, strengthen intellectual property protection and make it easier for US firms to do business there. That could reduce the deficit. To achieve that, the president has declared a trade war. This maximalist approach to the art of the deal is consistent with much of his foreign policy and has had some success. In trade negotiations with Mexico and South Korea, and on military and geopolitical issues such as Nato and North Korea, the table-banging has been reasonably effective. Why not with China and its vexatious trading practices?”
No chance for diplomacy
NRC Handelsblad fears there is little willingness to compromise on both sides:
“A strong front consisting of the US, the EU and other industrial nations could have achieved much. China's market is indeed too closed. ... However because Trump isn't cooperating but just acting unilaterally, he is narrowing the trade dispute into a conflict between the incumbent and the emerging superpower. Under the current circumstances we can expect Beijing to show even less willingness to compromise than it has done up to now. The usual diplomacy won't work with this unpredictable president in the White House.”