Trump's New Trade War With China Is Coming

 

With Donald Trump's commanding victory in the presidential election on Tuesday, the U.S.-China trade war is poised to intensify.

The trade dispute between the world’s two largest economies began in 2018 when Trump imposed a series of tariffs on hundreds of billions of dollars worth of Chinese goods. His justification was the alleged unfair trade practices and intellectual property theft by China.

Trump, who has branded himself the "Tariff Man" and called tariffs "the most beautiful word in the dictionary," has threatened to impose a 10% tariff on all imports, or even higher rates of up to 60% on Chinese goods alone.

These new tariffs could be imposed under Section 301 of the U.S. Trade Act of 1974, which empowers the U.S. to investigate and retaliate against foreign trade practices deemed unfair or harmful to American interests.

In response to questions on how China might react to Trump's potential tariffs, Chinese Foreign Ministry spokesperson Mao Ning declined to speculate, stating, "there is no winner in a trade war, nor will the world benefit from it."

Bonnie Glaser, managing director of the Indo-Pacific Program at the German Marshall Fund of the United States, noted that while she expects the incoming president to fulfill his campaign pledge, "it remains to be seen whether these tariffs will be part of a broader strategy aimed at winning the strategic competition with China."

Wu Xinbo, executive dean of the Institute of International Studies at Shanghai’s Fudan University, expressed similar doubts in a November 5 interview with Jiemian News, emphasizing the difficulty of implementing steep across-the-board tariff hikes.

"Whether tariffs on Chinese goods will reach 60 percent depends on the specific products the U.S. imports from China, and the actual tariffs may not end up being that high," he explained.

Trump has defended the tariffs as a tool to lower taxes and reduce the national debt.

However, a recent analysis by the Washington, D.C.-based Urban-Brookings Tax Policy Center found that while Trump’s tariffs could generate an estimated $3.7 trillion in gross revenue, the net increase in federal income would likely be closer to $2.8 trillion over the next decade, as the tariffs would likely reduce other tax revenues. Furthermore, the study noted that these tariffs would significantly raise the prices of imported goods, mostly passed on to consumers, which would reduce inflation-adjusted incomes and income tax revenues.

Earlier this year, the Biden administration decided to maintain tariffs on approximately $300 billion worth of Chinese products, a move that was condemned by the Chinese embassy as "unilateralism and protectionism."

Tariffs on Chinese-made solar cells, semiconductors, and medical supplies such as masks and gloves were increased from 25% to 50%. Duties on lithium-ion batteries were raised from 7.5% to 25%, while tariffs on Chinese electric vehicles were quadrupled, rising from 25% to 100%.