Washington could be dancing with itself

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REUTERS

The Trump administration said on Tuesday that it would proceed with plans to impose a series of punitive trade-related measures aimed at China next month. The statement said the US would levy 25 percent tariffs on $50 billion in imported Chinese goods, and will target items “containing industrially significant technology” related to the “Made in China 2025” programme. The new tariffs will be announced June 15.

White House officials said the Trump administration would move forward with restrictions on Chinese investment and on the access of Chinese companies and investors to American technology. The statement is nothing less than shocking for both China and the world as it was two weeks ago that both countries had reached a framework agreement on their economic and trade issues, while pledging not to engage in a trade war and to end slapping new tariffs on each other.

It was also announced that US Department of Commerce Secretary Wilbur Ross is scheduled to visit Beijing next week to continue discussions on the economic and trade issues. The White House has just made an abrupt change on the deal right when the situation was taking a turn for the better for both sides.

Does the US want to reignite the trade war with China? Obviously not. It’s likely that White House hardliners now have the whip in their hands after internal debate, and have proposed new tariffs on Chinese imports in an effort to apply more pressure.

The world faces an extremely mercurial White House administration. The Trump administration recently quit the Iran nuke deal and last year exited the Paris Agreement. It has also gone back and forth on the Trump-Kim summit. The fundamental logic of Washington is to raise the stakes in their negotiations with other countries. From that perspective, it is not abnormal that they would rescind its trade framework agreement with China.

Tuesday’s statement sends a clear message from Washington that the Sino-US trade dispute will be a long-term issue. It is not a problem that can be solved with a once-and-for-all agreement. It is expected the Trump administration will continue to raise the stakes in their future talks with China. Fortunately, the China-US trade agreement has yet to be implemented. With the US going back on its word, they have displayed one of their methods on how they deal with China-US trade issues. The Chinese government has the ability and wisdom to handle such situations.

The US could have trouble understanding the difference between a trade war and a real war. It is possible to win an actual war without casualties, but that wouldn’t happen in a trade war. There is no such thing as a landslide victory in a trade war, and trade losses can be guaranteed for everyone involved. This principle applies to the US as well, especially when confronting China, a country as strong as the US in terms of market size.

In a few days, Commerce Secretary Wilbur Ross will arrive in Beijing. If by then the US has decided to impose tariffs on Chinese goods, then it would be superfluous for both sides yet again to discuss the trade dispute. Let them prepare for an “epic trade war”.

The US delegation has not announced a cancellation of the upcoming visit. The US learned that its trade showdown with China did not work well in the previous talks, forcing them to return to the negotiating table. As Mr Ross’ arrival draws near, it seems that Sino-US trade talks have entered a new stage where the White House has now decided to use a higher level of toughness and bargaining chip negotiating to fight for a more favorable agreement. China has demonstrated that it does not want a trade war, while at the same time revealing that it is not afraid of one either.

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