Locked and loaded, China and the US are marching into a trade war
The omens have been there since a reality TV star took an unlikely tilt at the US presidency. Now Donald Trump is reaching for the trade gun in his holster. Make no mistake: the China-US trade war is finally upon us
As a candidate seeking the presidency of the United States, Donald Trump had promised in his seven-point plan to “Make America Great Again” that he would “use every lawful presidential power to remedy trade disputes” if China did not stop its “illegal activities, including its theft of American trade secrets”. And as President Trump, he has drawn out an unusually detailed list of statutory and unconventional trade policy enforcement tools.
Slowly, but surely, the moment of sanctioning has arrived.
From solar cells and washing machines to sorghum and blocked trade deals, the signs have grown increasingly ominous. The enormity of the coming friction is sometimes lost in the abstruse alphabet soup of trade-related acronyms and boring sections and sub-sections of commercial rules, but make no mistake, it’s quietly bubbling away and will spill out in the open – and perhaps very, very soon.
On Thursday, Trump let it be known in the course of a conversation with gathered US steel industry executives at the White House that he would be formally announcing a 25 per cent tariff and a 10 per cent tariff on steel and aluminium imports, respectively, next week. The tariff impositions are the product of a sweeping investigation initiated under Section 232 of the Trade Expansion Act of 1962 to determine whether Chinese and other countries’ imports threatened US national security. The probe was the first of its kind since a similar one launched on iron and steel in 2001, which at the time had found that these imports did not impair US national security needs.
Earlier this week, US Treasury Secretary Steve Mnuchin said the Trump administration was in “active” discussions with Beijing to avoid a trade war by boosting exports to China, though the message was undermined shortly afterwards when Trump in his annual report to Congress on his trade-policy agenda said the US would use “all available tools” to prevent China’s state-driven economic model from undermining global competition
Even as Mnuchin spoke at a US Chamber of Commerce event in Washington, a trade group was announcing that the US commerce department had implemented punitive tariffs of as much as 106 per cent on imports of aluminium foil from some mainland Chinese companies. As if to add insult to injury, that announcement came just as one of Chinese President Xi Jinping’s top economic advisers, Liu He, arrived in Washington.
