China is upset by the major tariffs announced by U.S. President Donald Trump on April 2, saying they should be cancelled immediately or it will respond with countermeasures to protect its interests.
Beijing's Commerce Department issued a statement Thursday saying the United States has overlooked the balance of interests in multilateral trade negotiations over the years and the fact that it has long benefited from international trade.
“China firmly opposes this and will take countermeasures to protect its own rights and interests,” the ministry said. As the world's largest economy looks deeper into a trade war to disrupt global supply chains.
See also: Follow us in our Chinese scientists’ firings are getting bigger
Trump announced on Wednesday that China will be hit by 34% tariffs, a 20% tax he previously imposed earlier this year, bringing the total tax to 54% and close to the 60% figure he threatened on the campaign.
Like exporters in other economies around the world “Reciprocal tariffs” Effective from April 9.
Big tariffs
Chad Brown, a senior fellow at the Peterson Institute for International Economics and chief economist at the Biden administration for the last year, said the average U.S. tariffs on Chinese goods would be 76%.
Trump also signed an executive order to close Trade loopholes are called “de minimis” This makes low-value packages from China and Hong Kong tax-free to enter the United States.
Trump orders U.S. Trade Representative to determine whether China meets its commitments in 2020 “Stage 1” United States-China Trade Agreement By April 1.
The deal requires China to increase U.S. export purchases by $200 billion over a two-year period, but Beijing failed to meet its target for the 19th-date pandemic.
China purchased $154 billion in U.S. goods in 2017 before the trade war began, and that figure rose to $164 billion last year, according to Chinese customs data.
Crisis of Chinese companies in other countries
“It can be said that President Trump's tariffs elsewhere will cause the biggest headache,” said Ruby Osman, a Chinese expert at Tony Blair Institute for Global Change.
“Chinese companies have been retraversing trade through places like Vietnam and Mexico to avoid our sanctions, but these markets are now subject to their own major tariffs.”
The “China+1” strategy among Chinese exporters and multinationals has made productivity at the heart of its supply chain during Trump's first term.
But as India, Mexico, Vietnam and Malaysia, the countries that benefit the most from this transition, face tariffs of 24% to 46%, significantly reducing the cost advantage of relocating manufacturing from China.
Jens Eskelund, president of the European Chamber of Commerce in China, said many companies have specifically adjusted their supply chains to limit their contacts with U.S.-China trade tensions and “any subsequent subsequent restructuring of the supply chain will not be possible overnight.”
Alternative Market
Additional taxes could encourage China to strengthen trade with alternative markets, but no other country is even close to the U.S. consumption capacity, with Chinese producers selling more than $400 billion in goods each year.
“Trump's tariffs certainly won't help Chinese companies and will cause some real pain in some sectors, but they don't have any certain impression of the Chinese economy,” said William Hurst, a professor of Chinese development at Cambridge University.
He added: “The importance of U.S. exports to China is declining. U.S. tariffs will stimulate more Chinese trade with elsewhere, from Europe to Southeast Asia and Africa.”
However, the shift to the alternative market will be shifted to the “rat race”, leading to a price war risk among exporters, as companies continue to squeeze profit margins, the world’s second-largest economy risked risk.
“China knows the coming threat”
Although China has kept its economic target at “about 5%” this year since Trump's tariffs, this could prevent the recovery of export leaders since the pandemic on the 19th.
The government has committed more fiscal stimulus, increased debt issuance, further monetary easing, and more emphasis on increasing domestic demand to mitigate the impact of the trade war.
“China knows that this day will appear ahead of schedule. At the two meetings in March, the relatively restricted stimulus announcements were calculations, not supervision,” Ottoman said.
“Beijing has purposefully retained more reserves in terms of domestic stimulus and retaliation measures,” she added.
The report said the two leaders may meet in the United States in June, and President Xi Jinping of China may also enter the competition.
“Trump and Xi are trapped in the paradox of stress and pride,” said Craig Singleton, a senior researcher at the Washington-based Institute for Democratic Defense.
“Trump’s strategy combines the greatest pressure with a sudden diplomatic proposal – he believes leverage and engagement are complementary. XI, by contrast, is methodical and risk-avoiding, relying on delays and discipline. But if he refuses to interact, the pressure escalates, if he interacts prematurely;
“Neither wants to be seen as a fold in the first place, but delays can deepen the confrontation.”
- Jim Pollard's additional editor Reuters
See also:
Trump's tariffs shock the Asian economy, fear of trade war
India could defy car halls, cut taxes on electric vehicles to appease Trump
China, Japan, South Korea strengthens trade relations as US tariff looms
After Trump announces 25% car tariffs
XI calls on foreign CEOs to help protect supply chains
April 2 is set to unveil Trump's reciprocal tariff date
Trump's steel tariffs will reach China's supply line through other countries
China cannot meet its “Phase One” trade commitments
