China retaliates against the Sino-US trade war provoked by Trump

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Early this morning, U.S. President Trump signed a presidential memorandum to impose punitive tariffs on $60 billion of Chinese imports to punish “China’s theft of U.S. intellectual property.” In signing the memo, Trump said,

This is the first of many.

President Donald Trump signs a Presidential Memorandum imposing tariffs and investment restrictions on China, in the Diplomatic Reception Room of the White House, Thursday, March 22, 2018, in Washington. (AP Photo/Evan Vucci)

Trump’s move officially launched a trade war with China, but it may seem that the U.S. took the first blow. The news of the memo shook the U.S. stock market. The Dow Jones Industrial index plunged more than 700 points. All three major stock indexes fell by more than 2.4 percent, the biggest one-day decline in the past month.

The news also plunged the global stock exchange market. When the Chinese stock market opened, Shanghai Composite Index and Shenzhen Component Index also declined by more than 3 percent. At closing, Shenzhen Component Index dropped by 4.02 percent, and Shanghai Composite Index also dropped by 3.39 percent. More than 400 stocks on the Shanghai and Shenzhen Stock Exchanges have fallen to their limits.

Tiankai Cui, Chinese ambassador to the U.S.

In the face of Trump’s restrictions on China, Tiankai Cui, China’s ambassador to the U.S., quickly responded on Facebook. He said that allegations of intellectual property infringement were “groundless.” He also stated that while China does not want a trade war, China was also not afraid of a trade war:

If somebody tries to impose a trade war upon us, we will fight back and we will retaliate. We will do whatever we can to defend legitimate interests. We will also do whatever we can to safeguard the open global trading system.

he said in a video posted on the embassy Facebook account.

Trump has been plotting for a long time.

According to the presidential memorandum signed by Trump, the U.S. Trade Representative Office will establish a specific plan to impose tariffs on Chinese goods within 15 days, and will also sue China at the World Trade Organization over alleged trade law violations.

At the same time, the U.S. Treasury will issue a plan within 60 days to limit Chinese companies’ investments in and acquisitions of U.S. companies.


Currently, the Trump administration has not disclosed which specific Chinese goods will be subject to tariffs. According to the New York Times and other media, the U.S. will introduce 100 tariff measures against China, and the U.S. Trade Representative Office has drawn up a tax list concerning 1,300 kinds of goods worth $48 billion. The New York Post commented on the tariff measures:

Trump’s order to impose tariffs on Chinese goods and limit China’s investment in the U.S. is a slap in the face to the world’s second-largest economy.

Trump said these measures are aimed at resolving the $375 billion trade deficit with China. He added that these tariffs “make us a stronger and richer country”.

This may be Trump’s vision of the American Dream. In fact, Trump has been planning to take a more aggressive trade approach with China ever since he took office.


The main basis for imposing tariffs on China is the investigation of China’s intellectual property practices under Section 301 of the Trade Act of 1974.

On August 14 last year, Trump signed an executive order authorizing Robert Lighthizer, U.S. Trade Representative (USTR) to formally launch trade investigations into China in the areas of technology transfer, intellectual property and innovation under Section 301 of the Trade Act of 1974. On August 18, Lighthizer announced the official launch of the investigation under Section 301.

Trump signed an executive order to launch investigations into China under Section 301

This trade act, born from the Cold War, has been a hegemonic weapon of American unilateralism and is now being used anew against China. Since 2001, the U.S. has only launched one survey under Section 301 against Ukraine in 2013.

Over the past 30 years, the U.S. has launched a number of surveys under Section 301 against China, mostly in the 1980s and 1990s.

In 2010, the U.S. announced to launch a survey under Section 301 relating to clean energy policies and measures in China. However, the U.S. and China reached an agreement and the U.S. did not take any measures in the end.

Photo from the New York Times

In the past, the U.S. mostly used survey under Section 301 as a means of deterrence. When Trump announced the launch of the survey under Section 301 on China, many institutions and scholars believed that its symbolic significance was greater than the practical significance.

Both the New York Times and the Financial Times pointed out that there was little chance of a trade war between China and the U.S. due to the length of the investigation and geopolitical factors.

Like the 2016 U.S. presidential election, Trump gave the U.S. and even the world a big “surprise”.

In fact, in January this year, the U.S. announced that it would impose temporary tariffs on imported solar cells, solar panels and large household washing machines.

Trump’s determination on “trade protectionism” was more evident earlier this month when he announced high tariffs on steel and aluminum imported from China.

The site of a steel-making plant in Guangzhou, China. Only 2 percent U.S. steel consumption comes from China. Photo from the New York Times.

At the G20 meeting, U.S. Treasury Secretary Steve Mnuchin once again stressed that a series of tariff measures implemented by the U.S. are designed to protect its industries from adverse impact of dumping and unfair competition.

U.S. companies do not seem to buy this. A few days ago, 45 trade associations called on the Trump administration to suspend tariffs on Chinese products, including large companies such as Apple, Google, Nike and Walmart.

After Trump announced massive tariffs on China, U.S. business organizations warned that this decision could be counterproductive. The imposition of tariffs will not only harm U.S. consumers, but may also provoke retaliation from China.

Photo from YouTube

The U.S. National Retail Federation said that tariffs would “allow ordinary Americans to be punished for Chinese violations”.

China fights back

As the Chinese Embassy in the U.S. stated, China is not only not afraid of a trade war, but “will fight back and will retaliate. If people want to play tough, we will play tough with them, and see who will last longer.”

On the morning of March 23, China’s Ministry of Commerce formally issued a statement on the Trump tariff measure and responded to U.S. trade measures by imposing tariffs on some U.S. imports to balance the damage caused by U.S. tariffs on Chinese steel and aluminum products.


China’s Ministry of Commerce unveiled plans Friday to impose tariffs on up to $3 billion worth of products from the United States to make up for losses caused by U.S. tariffs on Chinese steel and aluminum products. The list tentatively contains seven categories and 128 products.

The first part covers a total of 120 taxes on $977 million of U.S. exports to China, including fresh fruit, dried fruit, nut products, wine, modified ethanol, American ginseng and seamless steel pipes, and is expected to impose a 15 percent tariff.

The second part covers a total of eight taxes on $1.99 billion of U.S. exports to China, including pork, pork products and recycled aluminum. For these items, a 25 percent tariff is proposed.


The ministry said that China firmly opposes the unilateralism and trade protectionism carried out by the United States, as it disregards China’s efforts to strengthen the protection of intellectual property rights and ignores the rules set by the World Trade Organization.

China’s Ministry of Commerce made two announcements yesterday. One is to continue anti-dumping duties on photographic paper imported from the E.U., the U.S. and Japan. The second is the anti-dumping review of hydroquinone from the U.S. and Japan.

Trump suffers from his own actions

Chinese authorities and American media agree that Trump will suffer from his own actions.

Cui made it clear in his statement that the U.S. will experience just the opposite of Trump wishes.

The tariffs will directly damage the interests of U.S. consumers, corporate and financial markets, as well as disturb the international trade order and the stability of the world economy.

The New York Times also published an article entitled “Trump Says Getting Tough on Chinese Trade Will Empower U.S. He Risks the Opposite.” The article cites the views of trade experts, stating

Trade experts increasingly fret that Mr. Trump’s policies are doing the opposite: They potentially diminish the place of the United States in the world by alienating allies, undermining the potential for collective action among countries nursing shared grievances with China.

In an article, the Financial Times argued that Trump was not sufficiently prepared for the hair-triggering trade war:

Trump’s trade war with China is likely to become a quagmire that has long struggled to break free, like invading Afghanistan.

If the Trump administration imposes a 25 percent tariff on information and communications technology products imported from China, it will cause the U.S. economy to lose about $332 billion over the next 10 years, according to a study published by the Information Technology Innovation Foundation.

Trump’s decision will have a huge impact on the U.S. and the world, which is typical of his style. Trump may have made a hurtful decision, and the global stock market plunge is just the beginning.

However, the measures have not completely implemented. There will be a consultation period before the implementation of a tariff bill. Members of the relevant parties can also make amendments to the tariff policy, which is the last leeway.


But who can persuade Trump?

This article originally appeared in ifanr and was translated by Pandaily.
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