Where is the US-China tariff war headed?
The face-off in the tariff war between the US and China continues. First US President Donald Trump progressively increased the additional tariffs on Chinese imports to 145 percent. Then he announced temporary exemptions for the large electronic goods sector. Beijing has retaliated with counter-tariffs which are currently at 125 percent, and is also seeking economic alliances in other countries.
Trump has miscalculated
China can hold out for longer in this tug-of-war, Rzeczpospolita puts in:
“Neither America nor Europe can produce as cheaply and any relocation of factories would require huge sums and enormous effort. Which is why Trump is floundering; now he's suddenly upped the tariffs on electronics, and since this is the most important sector, China is keeping quiet. Beijing has an old saying that only a fool goes to war; a wise man sits on the riverbank and waits for his enemy's corpse to drift by. This is bad news for America's allies, including us.”
Xi Jinping won't be intimidated
France Inter also sees advantages for Beijing:
“For Xi Jinping, losing face or negotiating under pressure is out of the question. ... The Chinese president is not afraid of public opinion. ... He is undoubtedly more willing than Trump to demand sacrifices from his people. Moreover, China has levers to put pressure on Washington: the risk of high inflation in the US, control over rare earths (exports of which have been partially halted), even a devaluation of the yuan or a massive sell-off of US government bonds. Notwithstanding, China is not refusing to negotiate. It didn't choose this trade war. But it is prepared to tackle it.”
Don't be beguiled by Beijing
Les Echos warns against naivety where China is concerned:
“Since joining the WTO in 2001, it has skilfully exploited the organisation's rules to catch up with and even overtake other nations by becoming the subsidy-driven 'factory of the world'. ... The risk of being flooded with cheap Chinese products is increasing. The EU must not become a willing victim of the decoupling of the United States and China. In an increasingly fragmented world, it must forge trade alliances and bring the power of our 450 million consumers to bear - without making the wrong friends. It should work with Southeast Asia, India and Mexico and push the French to ratify the Mercosur agreement, rather than holding the doors of our single market wide open to China.”