Trump fines China with $50 billion a year plus some more…

This is how the trade war started. On March 9, 2018 the American President Donald J. Trump signed the Section 232 Proclamations on Steel and Aluminum Imports, imposing extra tariffs of 25% and 10% respectively (Official White House Photo by Joyce N. Boghosian)

The New Yorker President of ‘America first’, Donald Trump, has figured out the cash China has to pay the US every year, in order to continue exporting her products to the largest market of the globe. It’s something like the ‘protection’ cash New York shopkeepers have to pay the gangs in order to get on ‘peacefully’ with their business.

The Washington administration and, more precisely, U.S. Commerce Secretary Wilbur Ross explained: “It’s not something that’s going to be cataclysmic a 25 percent tariff on $200 billion of goods would only amount to $50bn a year, equal to less than 1 percent of China’s economy”. Ross added “President Donald Trump now feels that it’s potentially time to put more pressure on China to modify their behavior.”

Just…$50bn a year

In detail, the Trump administration is preparing to impose new tariffs on imports of goods from China of a value of $200 billion. Initially, the tariff was expected to be set at 10%, but now the White House has increased it to 25%. The ‘calculation’ of the extortion money is very simple; 25% on $200bn makes $50bn. This is what Trump wants China to pay America every year in order to keep open her US shops/exports. The ‘calculation’ Ross made summing it up to less than 1% of China’s GDP, is similar to the reckoning of the ‘protection’ money New York shopkeepers had or probably still have to pay to Mafia in order to get on with their business. But, let’s get a glimpse of the global picture.

Washington has recently agreed an economic truce with Brussels. On Wednesday 25 July, President Trump and the European Commission President Jean-Claude Juncker, concluded a trade armistice between the US and the EU. According to the ‘European Sting’, “the two sides agreed to lower or even zero the tariffs and the non-tariff barriers on industrial goods and cars and the European Union agreed to raise her imports of US natural gas….and soybeans”.

The EU finally sides with the US

Indirectly, but very clearly, Juncker also reassured Trump that Europe supports America in her trade conflict with China. The two sides included this reassurance as fourth clause in their joint statement. It seems that the European Union and, most probably, Germany, finally gave in to the American demands, but it’s not clear yet if Paris is to follow Berlin in this direction.

The relevant paragraph of the EU-US joint statement goes: “Fourthly, we agreed today to join forces to protect American and European companies better from unfair global trade practices. We will therefore work closely together with like-minded partners to reform the WTO and to address unfair trading practices, including intellectual property theft, forced technology transfer, industrial subsidies, distortions created by state owned enterprises, and overcapacity”. Almost all the American complaints against China are included in the above text, undersigned by Juncker.

Peaceful Atlantic but the Pacific in flames

Washington then, having secured a trade truce in the Atlantic Ocean, has now concentrated her aggression in the Pacific and, precisely, against China. This emboldened the US administration and so it decided to more than double the tariffs from 10% to 25% on the package of the threatened measures against the Chinese imports.

US Trade Representative Robert Lighthizer explained this unprecedented development. He clarified that Trump increased the tariffs because China ‘dared’ to take retaliatory measures and refused to comply with the US demands. It must be mentioned that the US has already imposed tariffs on Chinese imports of a value of $34bn.

Declaration of a trade war

All these American measures and hostile comments are very indicative of Washington’s belligerent intentions towards China. Add to that the above blatant calculation of the sum which practically constitutes a ‘toll fee’ and you end up with an outright declaration of a trade war. The situation has being dangerously aggravated by the fact that there have not been anymore contacts at a high political level between the two countries for a few weeks now, despite the continuation of talks on official levels.

Who opposes Trump?

At this point, it must be noted that within the US the opposition to this White House aggressive Chinese strategy is not too strong. It is authentically expressed by the largest business lobby of the US, the American Chamber of Commerce. The Chamber stated “Escalating tariffs against China is the wrong approach to address legitimate concerns U.S. businesses have with China’s harmful practices”. Obviously, the Chamber accepts that China follows harmful trade practices and disagrees only with the methods to solve the ‘problem’. On top of that, Trump is ready to spend $12bn more on subsidies to the agricultural sector, to make it up to producers for the losses of the Chinese markets.

China retaliates moderately

This brings us to the retaliation China is undertaking to answer the extra American tariffs. Last Friday, Beijing included the American natural gas and crude oil in the list of potential retaliatory measures, punishing US products of a value of $60bn in total. The levies will be implemented if the US realizes her $200bn package. China is the largest world importer of crude oil and the second largest in natural gas. Already, the Chinese energy companies are diversifying their supply sources to Saudi Arabia, the United Arab Emirates, Russia, Iraq and elsewhere. This will badly hurt the American effort to become the largest energy exporter of the world. Last Saturday, Beijing said that the $60bn list of US imports to be punished is a rather restrained response to the American aggression and blackmail. This is how Beijing characterizes the American action.

In conclusion, Washington, having secured Brussels’ backing, has raised the stakes in its Chinese trade assault. China  seems determined to respond moderately but straight away. The whole thing may escalate and turn a serious trade dispute into an all out geopolitical confrontation, between the first and the second largest economies of the world.

 

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the European Sting Milestones

Featured Stings

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

The EU seals CETA but plans to re-baptise TTIP after missing the 2016 deadline

‘Endemic’ sexual violence surging in South Sudan: UN human rights office

Parallel downfalls of Merkel and Deutsche Bank threaten Germany and Europe

China-EU Summit on 16-17 July 2018: “Work together to address common challenges”, by China’s Ambassador to the EU

China greenlights first underwater high-speed railway

Combatting terrorism: EP special committee calls for closer EU cooperation

Why do thousands of migrants need to be drowned for Brussels to wake up?

“C’est la vie”? French recession and unemployment to linger in Eurozone

Climate change and health: a much needed multidisciplinary approach

The gender gap of medicine in 2018

Cyprus Parliament says no to blackmail

Where are people most proud to be European?

The EU Parliament and the ECB unknowingly or unwillingly fail to protect our financial assets

A refugee from Syria cries out: “I’m not just a number!”

Is the EU’s enlargement over-stretched?

How a trade war would impact global growth

Public opinion misled by the Commission on air transport safety

High level political talks didn’t break the stalemate in Ukraine

India is a latecomer to AI. Here’s how it plans to catch up

EU to present a “hefty” exit bill to the UK moments before Brexit negotiations

Parliament backs a modernised EU electoral law

Wednesday’s Daily Brief: Diplomacy for Peace Day, #VaccinesWork, the cost of war on Afghans, tech and well-being

There are more than 1 billion guns in the world and this is who owns them

UN global education envoy urges new funding for ‘lost generation’ of children forced out of classrooms by conflict

The role of students in a migration crisis in Roraima, Brazil

FROM THE FIELD: Faces and Voices of Conflict

The world wide web is 30. Here are 8 things you should know about it

Trade protectionism and cartels threaten democracy

UN global counter-terrorism strategy review an ‘overarching vision for the future’: Assembly President

How civil society must adapt to survive its greatest challenges

This forgotten chemical element could be the key to our green energy future

EU Commission says falling labour remuneration leads to deflation and damages growth prospects

Antitrust: Commission fines Google €4.34 billion for illegal practices regarding Android mobile devices to strengthen dominance of Google’s search engine

We could be sleepwalking into a new crisis. How should the business world prepare?

Moscow’s Eurasian Union lost significance after the crisis in Ukraine

Trump fines China with $50 billion a year plus some more…

More state aid to big firms, no special provisions for the SMEs

45th Anniversary of the French Confederation (Confédération Nationale des Junior Entreprises)

A new era of computing is coming. How can we make sure it is sustainable?

COP21 Breaking News_08 December: Global Business Community Comes to Paris with Solutions for Taking On the Climate Challenge Across the Board

It’s not kids’ screen time you should worry about – it’s yours

“An open China brings opportunities to Europe”, a Sting Exclusive by China’s Ambassador to EU

External action: more funds for human rights, development and climate change

Europe on the Move: Commission completes its agenda for safe, clean and connected mobility

FROM THE FIELD: Survival in Yemen against all odds

Commission Vice-President Rehn exaggerates Eurozone’s growth prospects

EU leaders slammed on anti-tax evasion inaction and expensive energy

To hope or doubt? The state of women’s progress in the world

The Franco-German axis considers that all EU needs now is more armaments

Tax revenues continue increasing as the tax mix shifts further towards corporate and consumption taxes

Although Greece is struggling to pay salaries and pensions Varoufakis is “optimistic”; the Sting reports live from EBS 2015

EU Parliament shows its teeth in view of 2014 elections

Trade negotiations with US can start under certain conditions

Will AI make the gender gap in the workplace harder to close?

Close to final agreement on the EU Banking Union

Eurozone business activity again on upwards path

EU budget: Regional Development and Cohesion Policy beyond 2020

What lessons to draw from the destruction of Syria

Climate change: Will COP23 be able to accelerate the implementation of the Paris agreement?

‘Health is a right, not a privilege’ says WHO chief on World Health Day

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s