China journalist
ReutersBeijing has made its decision. It has decided to respond after weeks of warning of countermeasures and urging Washington to “meet China halfway” and to negotiate or at least harm to fight with its own tariffs.
China announced that starting on February 10, it would start imposing a 15 % tariff on coal and liquefied natural gas products, as well as a 10 % tariff on crude oil, agricultural machinery, and large-engine vehicles imported from the US.
The time is essential. The two largest economy of the world are still at risk of engaging in trade wars.
The two officials have scheduled a visit later this year, according to the White House, and there are indications, despite today’s statement, that China is in listening method and is keeping the door open for deals.
First, China’s shop actions are limited in scope compared to Donald Trump’s tax of 10 % on all Chinese items heading to the US.
America exports the most liquid natural gas globally, but China only accounts for about 2.3 % of those imports, and its main auto imports come from Europe and Japan.
This deliberate and careful targeting of goods may just be Beijing’s first move in order to snag some bargaining power and leverage before any discussions begin.
Authorities in China does find the polite beginning of relations between the US and China encouraging.
The US president claimed he had a “very good” phone call with President Xi weeks before his annual meeting, which was attended by the highest-level Taiwanese official who had ever been dispatched to such an occurrence. He has even suggested that he and Xi hope to work together to end Russia’s conflict in Ukraine.
As he is busy attempting to revive his personal ailing business, President Xi might not want to engage with Trump at this time.
Both officials are familiar with this, even though they might not want to go back in time. There was a wedding time in US-China relationships during Trump’s final term, before the marriage soured.
To offer or not to offer
Trump will also find it much more challenging to reach an agreement with China than with Mexico and Canada, and much of that will depend on what he demands from Beijing.
Cutting China off from key supply chains has been a top priority for the Trump administration, which makes it its chief financial competitor.
If Trump demands very far, Xi may feel as though he can leave, and there will be restrictions on how far he can push himself.
The US senator is dealing with a China that is much more comfortable now than he did in the past. Beijing has expanded its global footprint, and it is now the head business lover for more than 120 countries.
It has consistently tried to lessen the impact of business on its economy over the past 20 years and increased domestic production. Today, imports and exports account for around 37 % of China’s GDP, compared with more than 60 % in the early 2000s, according to the Council on Foreign Relations.
The 10 % tax does sting, but Beijing may think it can absorb the blow – for today.
The issue will be whether President Trump will actually increase that proportion to the 60 % he pledged during his plan or whether he will continue to use the threat of tariffs as a constant political tool to maintain over Xi’s brain.
Beijing will want to be prepared in the event that that occurs, which would require a strong plan in the event that this situation worsens.
Learning from the past
The leaders next signed a deal last time, but it didn’t work out properly.
The two nations imposed tit-for-tat taxes on hundreds of billions of dollars worth of goods starting in 2018.
It lasted for more than two years before China finally agreed to spend an additional$ 200 billion ( £161 billion ) annually on US goods in 2020.
Washington hoped the deal would reduce China’s enormous trade deficit, but the Covid epidemic caused the deal to fail, leaving the deficit at$ 361 billion, according to Chinese customs data.
China faces significant difficulties as a result of its thinking many steps ahead of any negotiations.
Beijing also exports nearly four times as much merchandise as it does, and during Trump’s second term in office, it ran out of things to destination.
If the trade war escalates, economists believe China will now consider a range of alternatives to tariffs as retaliation.
The clock is ticking. This is not a total trade war, however. Companies around the world will be keeping an eye on the outcome of the meeting’s outcome after this year.