Danger in US-China tit-for-tat

Submitted by SJW on 10 April, 2018 - 7:18 Author: Martin Thomas

As I write on 10 April, US stock markets are recovering after dipping in the wake of tit-for-tat tariff announcements by US president Donald Trump and by the Chinese government on 4-5 April.

Trump and then the Chinese authorities have announced new 25% tariffs on a range of imports from each other. Those are bigger than and additional to the new tariffs introduced by Trump in March on steel and aluminium, and the Chinese retaliations for them.

With China running a more-in-sorrow-than-in-anger, responsible-adult pose, majority plutocrat opinion is now hoping that the announcements are largely negotiating ploys, to be modified before implementation.

Otherwise, important sectors of US capitalism are worried that the new tariffs, supposed to improve their competitive position, will in fact worsen it by depriving them of low-cost Chinese components for their products.

Trump has given no deadline yet for bringing his new tariffs into force, and China says it will wait to see what Trump does.
The risks of a slide towards trade war remain. The slide will probably be moderate for now, but vulnerable to escalating out of control when a new 2008-type crash comes round.

Trump has swung his administration team to the maverick populist right, with only Defence Secretary James Mattis remaining of the former “responsible adults”.

He, or his advisers, seem genuinely to think that the relative decline of some sections of US industry is due to low tariffs and that the clock can be run backwards by raising trade barriers. As Lawrence Summers, a top economic official for Clinton and Obama, points out (Financial Times, 9 April), that view is delusory.

“The US economy was largely open [in tariff terms] by the 1980s and... every major trade agreement has reduced other nations’ trade barriers by far more than it altered any American trade barriers.

“The real reason for economic disruption was not trade agreements but the emergence of emerging markets as major participants in the global economy”.

The world may be pushed into beggar-your-neighbour-ism by Trump chasing an impossible and demagogic aim of restoring imagined “good old days”.

Add new comment

This website uses cookies, you can find out more and set your preferences here.
By continuing to use this website, you agree to our Privacy Policy and Terms & Conditions.