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An action usually follows a reaction, which at least implies principle of interaction. Perhaps that is why US government is again a bit far abandoned from announced punitive tariffs against China. Trump’s new economic adviser Larry Kudlow said on Thursday that measures were only initial proposals. There is still a lot of room for negotiation. Neverless, in next few weeks, this dispute is threatening to grow into a real trade war that world has not experienced for decades.
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In meantime, China is countering. Only a few hours after US trade Representative Robert Lighthizer presented a list of 1,333 Chinese products to which his country intends to levy an additional 25 percent duty on imports, Chinese leaders presented ir own list. And it’s nothing to do with American.
Soy beans, beef, cars, chemicals, tobacco, oranges, also symbol-like whiskey or planes are on this list. 106 US products designates China’s leadership and wants to prove it on importation with punitive tariffs at same level – if US government actually implements its threat.
In order to lower China’s export surplus to US from last 375 billion to 100 billion dollars, US president Donald Trump announced that, following penalties imposed on steel, aluminium and washing machines, importation of cars, televisions, pharmaceuticals and Industrial preproductions with this levy.
China is largest soy buyer
What is striking is that US punitive tariffs are primarily aimed at products from Chinese high-tech industries, including mechanical engineering, space travel, and information and communications technology. These are industries in which Chinese leadership, with its “Made in China 2025” strategy, wants to become world leader in coming years. With instrument of punitive duty, Trump government seems to want to stop China’s rise to technological superpower. Simple goods such as clos, shoes and toys have been excluded. US consumers do not seem to feel price increase immediately.
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However, strategy could also harm US elsewhere. China analyst Arthur Kroeber from Beijing’s Gavekal Business Consulting Institute, US technology companies have invested heavily in China in recent years. It is extremely difficult to “find punitive tariffs that harm China more than US,” says Kroeber.
With punitive tariffs on soy and beef, China wants to meet in particular rural areas in US – Trump’s core electorate. Soybeans are one of largest and most profitable agricultural export products in United States. And China is biggest buyer. In 2017, United States shiped soybeans worth approximately 14 billion dollars to China. Entire land lines in Midwest have specialised in cultivation of soya because of great demand from Far East.
