Beijing fears a Trump backlash after export push
China’s manufacturers are left rattled by the threat of 60% tariffs after US presidential election result
Fears of the Trump effect have rippled across China as factories are racing to ship orders ahead of Trade War 2.0. Massive manufacturing over-capacity and anemic domestic demand have left major global markets awash with heavily subsidized Chinese products.
Last month, exports grew at the fastest pace in more than two years amid concerns of 60% tariffs after Donald Trump’s sweeping presidential election victory. It means China now faces a two-front trade war with the United States and the European Union.
“I think we should believe that he means it when he talks about tariffs, that he sees China as having reneged on his trade deal [in 2020],” Bill Bishop, the founder of the Sinocism China Newsletter, wrote.
At the time, then-President Trump called the agreement “historic” after hammering it out with his “very, very good friend” Xi Jinping, China’s autocratic leader. Two years later, it fell apart amid the Covid-19 pandemic and a “recession.”
“Today the only undisputed ‘historical’ aspect of that agreement is its failure,” Chad P Bown, of the Peterson Institute for International Economics, pointed out in 2022.
That issue alone raises enough worries about huge uncertainties.
China Daily Editorial
Back to the future:
- Trump’s 60% tariff threat has rattled China’s business community.
- Exports worth around US$500 billion are shipped to the US annually.
- It comes as trade tension with the European Union escalates.
- Exports from China to the EU hovered around US$466 billion last year.
Delve deeper: “Trump’s policy toward China in his second administration will likely be similar to the approach during his first term,” Michael Schuman at the Atlantic Council’s Global China Hub said in a commentary this week.
Between the lines: “He has already shown a continued fixation on trade and outlined a plan to impose high tariffs, which will reignite disputes with Beijing,” he wrote.
Big picture: Beijing hopes that the divisive nature of Trump’s campaign and the polarization of American politics will consume the opening months of his administration. Yet dread still stalks the halls of power inside the ruling Communist Party.
What was said: “A solution that Trump has offered to end economic woes is higher tariffs … That issue alone raises enough worries about huge uncertainties for future China-US relations,” state-run China Daily said in an editorial.
China Factor comment: Trump’s fragile ego and obsession with tariffs are likely to stretch the United States and the global economy to breaking point.