Trump escalates trade war with China

China has retaliated with equally punitive tariffs on US imports. How will it end? Emily Hohler reports.


Donald Trump: underestimating China's ability to hit back
(Image credit: Copyright (c) 2018 Shutterstock. No use without permission.)

President Donald Trump's trade war with China escalated rapidly last Tuesday after his administration announced details of new 25% tariffs on $50bn worth of imports from China. Within hours, Beijing announced that it would impose a 25% levy on $50bn of US products, including soybeans, one of America's biggest exports to China.

The US precipitated this chain of events by imposing tariffs on Chinese steel and aluminium imports valued at around $3bn in March. Last Monday, China slapped tariffs on 128 US products, amounting to a similar value, and an editorial in the Chinese tabloid Global Times warned that America could "say goodbye" to the "delusion" that China would take only symbolic countermeasures.

Nevertheless, China is keen to portray itself as a responsible actor in contrast to a "rogue" US that is "shunning multilateral cooperation", says David Lynch in The Washington Post. At a press conference on Wednesday, China's deputy finance minister Zhu Guangyao said a trade war would benefit neither country andrestated its preference for cooperation.

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Fear of tech dominance

Why does Trump appear to be intent on picking a fight? The president is determined to reduce his country's $375.2bn trade deficit in goods with China but, more specifically, the Trump administration is concerned about Beijing "bolstering its own technological and economic development at the expense of US companies", says Adam Behsudi in Politico.

The list of 1,333 goods released on Tuesday is a specific response to an investigation into Beijing's intellectual property practices ordered by Trump last year and strikes directly at Beijing's "Made in China 2025" programme, which the US sees as a "direct threat to American economic hegemony", says Richard Staropoli, former chief information officer of the US Department of Homeland Security in the Financial Times.

Although I support free trade, continues Staropoli, I believe that these levies are "long overdue". We are in a "new cold war with Beijing, to retain control of the technology critical to the modern economy". Chinese equipment makers stand "centre stage" in the future of 5G networks and it is estimated that Chinese firms already own 10% of the intellectual property deemed essential to them. This is of particular concern because of the Chinese government's efforts to curtail freedom of expression. "We are in danger of giving away the internet market to [China]... If we do nothing, we're not supporting free enterprise we're buying our way into economic servitude."

A war the US can win?

Cui Tiankai, China's ambassador to the US, insists on the China Global Television Network that the key issue is how new technologies can "benefit as many people as possible". He has played down allegations that Beijing was "siphoning off US innovation", says Adam Behsudi, claiming that China was trying to strengthen intellectual property rights. Either way, the US shouldn't underestimate China, says Adam Lusher in The Independent.

As Robert Ross, professor of political science at Boston College, told the newspaper, "We are making policy as if we are still the dominant superpower but China [is powerful enough] to retaliate." As if to confirm this, China's official news agency Xinhua describes Trump's latest round of tariffs as a "self-defeating gamble", saying they will hamper the US economy and "pose a grave threat to the current global trading system".

Emily Hohler

Emily has worked as a journalist for more than thirty years and was formerly Assistant Editor of MoneyWeek, which she helped launch in 2000. Prior to this, she was Deputy Features Editor of The Times and a Commissioning Editor for The Independent on Sunday and The Daily Telegraph. She has written for most of the national newspapers including The Times, the Daily and Sunday Telegraph, The Evening Standard and The Daily Mail, She interviewed celebrities weekly for The Sunday Telegraph and wrote a regular column for The Evening Standard. As Political Editor of MoneyWeek, Emily has covered subjects from Brexit to the Gaza war.

Aside from her writing, Emily trained as Nutritional Therapist following her son's diagnosis with Type 1 diabetes in 2011 and now works as a practitioner for Nature Doc, offering one-to-one consultations and running workshops in Oxfordshire.