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Diplomacy, Economics

China takes on US in trade war as Asia makes other plans

China has engaged Washington in a series of reciprocal tariffs – while the rest of Asia watches and makes other plans.


Written by

Updated: April 6, 2018

Despite overtures made by China to negotiate and avoid a trade war, Beijing has signalled that it will not back down from Washington’s protectionist trade policies.

The US administration decided last month to impose a 25-percent tariff on steel imports and a 10-percent tariff on aluminium imports from countries including China.

Some countries, including South Korea, have renegotiated trade pacts with the United States to exempt themselves from the tariffs.

Japanese Prime Minister Shinzo Abe plans to urge Trump in person to offer Japan an exemption from the tariffs, according to the Yomiuri Shimbun.

But where some countries have kowtowed to US pressure, China has reversed course and is aggressively countering US policies.

Tit for Tat

China on Thursday filed a request for consultation with the World Trade Organization regarding Washington’s tariffs on steel and aluminium imports.

“With the United States refusing to enter compensation negotiations in accordance with WTO rules, China has to initiate the dispute settlement procedure to protect its rights and interests,” Beijing said in a statement.

China also imposed levies on $3 billion worth of US fruits, nuts, pork and wine to protest the Trump administration’s move to impose tariffs on steel and aluminium imported from China last month.

On Tuesday, the Trump administration proposed levying 25 percent tariffs on 1,300 Chinese goods in aviation, technology and machinery sectors, which would add up to about $50 billion annually.

In retaliation, China on Wednesday announced plans to impose its own 25 percent tariff on $50 billion worth of US exports including aircraft, cars and soybeans.

“If the US decides to impose tariffs on Chinese goods in an aggressive way, it will be surprised by the fact that China has the ability to fight back aggressively, too,” said Zhang Monan, director of the Institute of International Trade. “After all, the US relies on Chinese products more than China relies on US goods.”

According to Nirmal Ghosh of the Straits Times, “China’s imposition of tariffs targets part of US President Donald Trump’s political base.”

Those hardest hit by the tariffs will be farmers, blue-collar workers and the manufacturing base, key elements of Trumps demographic and a something to be taken to account as the United States gears itself up for mid-term elections in November.

Both sides have tried to ease fears and have publicly said that they are not embroiled in a trade war, Trump himself tweeted as much.

Meanwhile, China’s state-owned papers have gone on the offensive and highlighted ways the tariffs were bad for both countries and the mistakes made by the Trump administration.

“By threatening protectionist tariffs, Trump has caused a major disruption in the global trading system and also put Americans in harm’s way. US consumers, farmers and blue-collar workers, many of whom voted for Trump, have been hurt already,” said Chen Weihua in an editorial in the China Daily.

“The Trump administration should realize that such a ploy will not work with China, a country that will not yield to any external pressure aimed at compromising its interests,” said another China Daily editorial.

Asia watches

With the world’s two largest economies looking set to continue their tit-for-tat measures, the rest of Asia has quietly begun enacting contingency plans.

South Korea said that it would reduce its reliance on its two main export destinations, the US and China, and diversify its markets to Eurasia, ASEAN and India, according to the Ministry of Trade, Industry and Energy.

Other countries across Asia have also revived the Obama-administration led Trans-Pacific Partnership – only this time without US involvement.



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Cod Satrusayang
About the Author: Cod Satrusayang is the Managing Editor at Asia News Network.

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