Asad Mirza
As if the tariff war against almost the whole world, leading among them China, Mexico, Canada, and India, hots up, it portrays the leading hero, Trump in this case, frothing at the mouth and cursing and cussing everyone, if he does not get what he wants, and shows a completely new and unacceptable face of the American democracy and diplomacy.
Accusations and counter accusations are flying around but the optics are definitely working against Donald Trump. If only he had described the Tariff War against China as a War Against Drugs, he might have been able to garner much more sympathy.
But he has chosen the other way around to restrict transfer of technology to China and trying to curtail its capacity to dominate the world’s chips and supercomputer technology and industry.
The recent cumulative 20% tax on all Chinese goods comes on top of a slew of tariffs Trump imposed in his first term on tens of billions of dollars of Chinese imports.
And currently, countering those earlier tariffs imposed during Trump 1.0, China has already in place a counter strategy,which had started bearing results then and now also. By 2024, Beijing had blocked exports to the US of critical minerals used to make chips, restricted the supply chain for US-made drones, threatened to blacklist a prominent US clothing company and launched an antitrust investigation into Nvidia. By taking these actions, Beijing haddemonstrated its capabilities to overcome the American pressure.
Moreover now, Xi has warned the US it is ready to fight “any type” of war, as it retaliates against mounting US trade tariffs – while raising spending on its military.
Trump has justified fresh tariffs on Chinese goods by blaming Beijing for the Fentanyl opioid crisis in the US. He claimed that a “large percentage” of these deadly substances were made in China.China in its defence has accused the White House of “blackmail” over its tariff hike, claiming it has some of the world’s toughest anti-drug policies.
In his address to the joint session of the US Congress, Trump claimed other countries have used tariffs against the US for decades. “Now it’s our turn to start using them against those other countries. On average, the European Union, China, Brazil, India, Mexico and Canada … and countless other nations charge us tremendously higher tariffs than we charge them. It’s very unfair,” the president said.
This came within minutes of a new 10% US levy on Chinese imports that came into effect on Tuesday (4 March) – which adds to existing tariffs both from Trump’s first term and those announced last month.
Meanwhile, as mentioned earlier, China had earlier-on started taking preventive measures. 2023 onwards, Beijing started a fiscal and monetary stimulus to help businesses and, subsequently, consumers, which generated some positive results as banks and financial institutions instead of supporting the real estate trade and ventures diversified their lending towards industry and innovation. It was clearly necessary, but its scope and nature were also developed with a potential trade war in mind.
In fact, China had begun a transformation from garments and shoes manufacturer to advanced tech, such as robotics and artificial intelligence (AI) long before Trump became president. And that has given China an “early mover” advantage, not to mention the scale of production to the world’s second-largest economy.
Indeed, Chinese factories can produce high-end tech in large quantities at a low cost, not based on cheap labour but taking advantage of economies of scale.
Additionally, Beijingfocussed more on expanding economic ties globally, besides announcing unilateral reductions in tariffs on imports from non-US partners. During his visit to Peru, Xi inaugurated a deep-water port that could reshape China’s trade with Latin America – a key non-US source of food, energy, and minerals.
This is the second round of tariffs the two countries have imposed on each other since February. But this time China is hitting Donald Trump where it has the potential to hurt – by targeting farmers, who are some of his core supporters.
China is one of the biggest US-customer for chicken, beef, pork, and soybeans and now all those products will face a 10-15% tax which will be effective from today onwards, i.e. 10 March.
Beijing may hope that this will apply some pressure on the Trump administration ahead of any potential negotiations.
The latest announcements raise the prospect of an all-out trade war between the world’s top two economies, but in various foreign ministry statements, China has made two things very clear.
Firstly, it is prepared to continue to fight.“Pressure, coercion and threats are not the right way to deal with the Chinese side.” said foreign ministry spokesman Lin Jian.
But secondly, it is also willing to talk.Beijing is not ramping up the rhetoric or the tariffs in the same way it did in 2018, during the last Trump administration. Though, back then it imposed a tariff of 25% on US soybeans.
Xi Jinping has left the door open for talks, experts say. But when will these talks take place, no one knows
Further, in contrast to Canada and Mexico, Beijing has not announced new measures to target Fentanyl. Last week, the Chinese State Council released a White Paper titled “Controlling Fentanyl-related substances – China’s contribution”.
The document outlines the measures Beijing says it has already made to crack down on Fentanyl-related crimes and the precursor chemicals used to make the drug. It adds that it is “diligently fulfilling international drug control obligations”.
Despite stating that China “will not yield”, these latest tariffs are bound to sting.At the same time, Chinese Commerce Ministry has reiterated that it is prepared to work with other countries around the world to combat Trump’s tariffs.
Beijing appears to be looking for potential allies in this trade war while also trying to portray Washington as a troublemaker who is prepared to target friends and foes alike.
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