The Trump administration ready to fight at any cost on the trade

Politics

Threatening the threat of massive new tariffs against China, the administration claims to be ready to go through the showdown with its trading partners, ignoring retaliation and diplomatic contingencies.

The United States announced Tuesday its intention to tax, from September, $ 200 billion of Chinese imports to the tune of 10% to add to the 50 billion property taxed at 25%.

The period when one could hope that the threats of the American president were only “bluffing and words in the air” is over, summarizes Edward Alden, expert in international trade at the Council on Foreign Relations, noting that Donald Trump does very well. exactly what he’s threatening to do since the presidential campaign in 2016.

“The new tariffs clearly illustrate Trump’s desire to raise the stakes until China capitulates, which seems highly unlikely (…) China is not in the mood for compromise,” said his part is Eswar Prasad, China specialist and professor of commercial policy at Cornell University.

In announcing the new measures on Tuesday, the US Trade Representative (USTR) Robert Lighthizer has also had particularly harsh words for China, believing that the behavior of the Asian giant threatened the future of the US economy.

“Rather than responding to our legitimate concerns, China has begun retaliating against US products. Such actions are unjustifiable, “he accused, as the Trump administration urges China” to end its unfair practices, open its markets “to reduce the colossal US trade deficit with the giant Asian.

The Chinese Ministry of Commerce immediately described the new US threats as “totally unacceptable” and the US behavior as “irrational”.

However, the White House’s trade policy needs to be analyzed in light of the prospect of the mid-term elections to be held on November 6, according to some economists.

“Currently, the president’s concern is to rally his base and to rally his base, he must show that he is keeping his campaign promises,” observes Monica de Bolle, a specialist at the Peterson Institute for International Economics.

She points out that Trump supporters in 2016 are precisely those who make Beijing responsible for the loss of jobs in the United States.

And this republican president’s hard-line policy has so far benefited from favorable conditions.

The US economy is doing well. The United States shows full employment and despite some ups and downs, Wall Street has largely grown since the election of Donald Trump (+ 33% for the Dow Jones, + 47% for the Nasdaq and + 28% for the S & P 500).

Favorable environment

For the time being, “there is no tangible evidence that this (this protectionist policy) is damaging the economy, except for a few specific companies” already affected by customs duties, says Edward Alden.

So that Donald Trump remains deaf to the retaliation of its main partners or allies (Canada, China, European Union and Mexico), which will end up affecting the consumers, say the experts.

In particular, they are concerned about rising prices for consumers due to higher prices for products imported or manufactured in the United States.

They also expect US threats to impose new tariffs this time on the auto sector.

If this were the case, the shockwaves on the world economy would be much more unmanageable, this sector being at the heart of world trade.

The Commerce Department is due to report back to the White House in a few weeks after hearings by relevant stakeholders.

German car imports are especially in the American viewfinder.

Wednesday, Donald Trump is once again taken to Germany, the largest economic power of the EU, denouncing this time its ambiguity against Russia.

“It pays billions of dollars to Russia for its energy supplies and we have to pay to protect it against Russia. How to explain this? It’s not fair, “said the president on the first day of the NATO summit in Brussels.

While pressuring the Europeans on trade issues, the president also suggested they double their military spending to 4% of their GDP.

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