US trade renege could leave Washington dancing with itself
White House officials said the Trump administration would move forward with restrictions on Chinese investment and on the access of Chinese companies and investors to American technology. Those restrictions will be announced by June 30.
The statement is nothing less than shocking for both China and the world as it was two weeks ago that both countries had reached a framework agreement on their economic and trade issues, while pledging not to engage in a trade war and to end slapping new tariffs on each other.
It was also announced that US Department of Commerce Secretary Wilbur Ross is scheduled to visit Beijing next week to continue discussions on the economic and trade issues. The White House has just made an abrupt change on the deal right when the situation was taking a turn for the better for both sides.
Does the US want to reignite the trade war with China? Obviously not. It’s likely that White House hardliners now have the whip in their hands after internal debate, and have proposed new tariffs on Chinese imports in an effort to apply more pressure.
The world faces an extremely mercurial White House administration. The Trump administration recently quit the Iran nuke deal and last year exited the Paris Agreement. It has also gone back and forth on the Trump-Kim summit. The fundamental logic of Washington is to raise the stakes in their negotiations with other countries. From that perspective, it is not abnormal that they would rescind its trade framework agreement with China.
Tuesday’s statement sends a clear message from Washington that the Sino-US trade dispute will be a long-term issue. It is not a problem that can be solved with a once-and-for-all agreement. It is expected the Trump administration will continue to raise the stakes in their future talks with China.
Fortunately, the China-US trade agreement has yet to be implemented. With the US going back on its word, they have displayed one of their methods on how they deal with China-US trade issues. The Chinese government has the ability and wisdom to handle such situations.
The US could have trouble understanding the difference between a trade war and a real war. It is possible to win an actual war without casualties, but that wouldn’t happen in a trade war.
There is no such thing as a landslide victory in a trade war, and trade losses can be guaranteed for everyone involved. This principle applies to the US as well, especially when confronting China, a country as strong as the US in terms of market size.
In a few days, Commerce Secretary Wilbur Ross will arrive in Beijing. If by then the US has decided to impose tariffs on Chinese goods, then it would be superfluous for both sides yet again to discuss the trade dispute. Let them prepare for an “epic trade war.”
The US delegation has not announced a cancellation of the upcoming visit. The US learned that its trade showdown with China did not work well in the previous talks, forcing them to return to the negotiating table. As Ross’ arrival draws near, it seems that Sino-US trade talks have entered a new stage where the White House has now decided to use a higher level of toughness and bargaining chip negotiating to fight for a more favorable agreement.
This latest statement from Washington reveals a US side unwilling to keep their word on any agreement as it could fluctuate according to market conditions. As a result, China must remain steadfast with its bottom line and take a firm stance to safeguard national interest in the coming trade talks.
China has demonstrated that it does not want a trade war, while at the same time revealing that it is not afraid of one either. China’s attitude on a trade war remains the same and will always be consistent. The Chinese government will have the necessary measures in place to deal with a US withdrawal from any settled agreement. If the US wants to play games, then China would be more than willing to play along and do so until the very end.
A full-scale trade war would be inevitable if the US imposes $50 billion in tariffs on imported Chinese goods and tech products beginning June 15. The move would also mean that any previous agreements reached by both sides would be rendered invalid, and China would then respond with similar punitive measures.
The sudden switch from guaranteed exports to China to a full-blown trade war must be a painful rollercoaster of a ride for the US.
Almost immediately, farmers, automobile manufacturers, and the nation’s energy workforce would be at risk. Behind Washington’s tough façade lies its failure to handle divided opinions within their Oval Office, and China is fully aware of this.
If the US continues to take this same protectionist stance and implements stronger trade policies regardless of opposition from Beijing, then China is confident it can fight to the end.
Washington suffers from a delusion whereby it feels the US is strong enough to force other countries to accept their unreasonable demands. The US needs to show a level of sincere compromise when negotiating, and meet China halfway by addressing their concerns and agreements previously reached.
The rules of any civilized society mandate that one country should not tolerate the actions of another country that randomly violates any agreement or treaty. Breaking a promise for the purposes of landing a better deal is a bad habit for Washington to develop, and it is something China won’t allow.