Trump picking a fight with China now?
In addition to the tariffs on steel and aluminium US President Donald Trump has now announced concrete trade policy measures against China, including import tariffs and investment restrictions. The plans are aimed at reducing the US trade deficit with China. Commentators, however, don't believe he's doing the US economy any favours with this strategy.
Trump penalising the US's biggest financer
The tariffs against China will be an own goal for Trump, the taz newspaper's China correspondent Felix Lee comments:
“There is a backflow of capital for any export surplus China has vis-à-via the US. It's simple trade logic. In concrete terms: America buys goods from China and pays for them with US dollars. But with the same dollars the Republic of China buys American government bonds - thus granting the US credit with them. China has invested most of its surplus in US bonds. ... If the trade deficit now goes down because of the tariffs, Trump loses his main source of government financing. A by no means trivial factor considering that US government debt is now at over 20 trillion dollars.”
Beijing won't take this lying down
The Chinese state-owned paper Global Times answers threat with threat:
“If the US wants to reduce its trade deficit, it has to make Americans more hard-working. ... It's unreasonable to play victim. By hanging tough, Trump wants to gain as many benefits as possible for his country so as to appease his voters and win re-election. He has done well at this until lately. But he shouldn't invoke confrontation. Once a trade war starts, capable countries won't bow to the US. China has tried hard to avoid a trade war, but if one breaks out, appeasement is not an option. ... China won't allow itself to be trampled upon. Perhaps it is China's destiny to struggle with the US only in order to teach Washington a lesson.”
Ignoring the laws of economics
The rules of globalisation are at the root of this conflict, explains Economist Alfonso Tuor in Corriere del Ticino:
“Globalisation has destroyed the labour markets in the old industrial nations and created untenable inequalities. It has triggered an unstoppable wage and tax dumping process. ... The main goal was always ever greater competitiveness. With the result that domestic markets suffered. People simply failed to consider that the trade surplus of one country automatically entails the deficit of another country, which leads to unresolvable political and economic tensions.”