A clear barrier: why the US wanted to conclude a trade deal with China
With the escalation of the trade war between the United States and China in East Asia, new economic alliances may be forming against Donald Trump's trade policy. And Washington is seriously afraid of this, experts interviewed by Izvestia say. Therefore, according to them, negotiations between the United States and China can be expected in the near future. The head of the White House has already stated that he does not intend to raise tariffs on Chinese goods and plans to conclude deals with various countries, including China. If China and the United States fail to reach a compromise, it will trigger a serious downturn in the world's two largest economies, which will inevitably affect the entire global trade.
How Trump's tariffs against China are hitting America
On April 18, US President Donald Trump made it clear that the US customs duties imposed on Chinese products could be reduced. Then the head of the White House said that the United States intends to conclude trade deals with all countries, including China, within the next three to four weeks. There has been no official reaction from Beijing yet. However, earlier, Chinese Ambassador to Russia Zhang Hanhui said that "if the United States is really interested in a dialogue with China on tariffs, they should immediately correct their mistakes and demonstrate an approach based on equality, respect and mutual benefit."
Recall that the United States imposed duties on Chinese goods in the amount of 145%. China responded with a 125% tariff on American products. In addition, Beijing has imposed restrictions on the export of certain minerals, including important rare earth metals. Against this background, the White House threatened China with tariffs of 245% a few days ago.
Despite the fact that Donald Trump previously claimed that duties allow the United States to generate record revenues and reduce inflation, Washington cannot ignore the negative effect of the trade war. For example, Federal Reserve Chairman Jerome Powell recently admitted that the impact of tariffs could be "significantly greater than expected." At the same time, according to him, they can lead, on the contrary, to an increase in inflation, at least temporarily. Trump obviously did not like this assessment of the situation. The president is currently considering firing the head of the Federal Reserve, said Kevin Hassett, head of the National Economic Council at the White House.
The tariffs imposed on China will primarily be felt by American consumers, who will face higher prices for familiar items. First of all, a number of imported goods such as textiles, footwear and electronics are projected to rise in price. Prices for appliances are expected to rise by 10%, and for clothing by 15-20%. Earlier, Reuters reported that the United States risks leaving Americans without Christmas decorations.
China's suspension of exports of magnets and rare earth metals could jeopardize high-tech industries in the United States, such as electronics and defense products. In addition, the republic has completely stopped importing liquefied natural gas (LNG) from the United States amid escalating trade disputes between the countries, the Financial Times reported. According to the publication, the last batch of American LNG arrived in the Chinese province of Fujian on February 6, after which no new ones were recorded. One of the tankers with American gas, having failed to arrive before the tariffs came into force, was even redirected to Bangladesh.
— Tariffs are hitting both the United States and China. China has even closed its operational customs statistics because it does not want experts from other countries to analyze the changes taking place in foreign trade. There is a lot of demand for Chinese products in the American market," Ekaterina Zaklyazminskaya, a leading researcher at the Center for World Politics and Strategic Analysis of the ISSA RAS, tells Izvestia.
Creation of "anti-tariff" alliances
It is possible that negotiations between Beijing and Washington will take place in the near future, Nikolai Marchenko, a Sinologist and director of the Autonomous Non-Governmental Organization Eurasian Youth Projects, told Izvestia.
— A trade war is not beneficial to anyone. Especially export-oriented China, with which the United States has a negative trade balance. Ultimately, if the parties fail to reach an agreement, this will lead the two largest economies to a significant recession, which will certainly affect the course of global trade," he said.
According to him, the deal between Beijing and Washington may look like an exchange of mutual commitments to conduct bilateral trade. For example, Trump may require China to increase imports from the United States. This is necessary in order to "even out" the trade balance between the countries in favor of Washington and stimulate the growth of American production, as the head of the White House has repeatedly stated. In this case, the amount of duties on Chinese goods may be reduced, but it is unlikely to reach zero.
The United States is most afraid of "anti-tariff" alliances, Ekaterina Zaklyazminskaya believes. And this may push Washington towards the negotiation process with China. In her opinion, China is making significant efforts to rally around itself the states dissatisfied with the introduction of import duties.
— The Chinese leader has embarked on a tour to Southeast Asian countries, as the ASEAN countries remain China's key trading partners. Xi Jinping visited Vietnam, Malaysia and Cambodia this week. These countries were sites for the re-export of Chinese products to the United States. Washington planned to impose duties of 46%, 24% and 49% on them, respectively," she added.
The United States also fears a rapprochement between China and its allies, the United States: Japan and South Korea, as after the escalation of the tariff war, the three countries once again started talking about a free trade area. On March 30 in Seoul, China, Japan and South Korea held the first economic dialogue in the last five years. At the meeting, the parties discussed the agreement on a trilateral free trade area, aiming at the development of regional and global trade.
Despite the desire of Tokyo and Seoul to strengthen their ties with Beijing, they are not in the mood to worsen relations with Washington. After agreeing with China to unite against Trump's tariff war, Japanese representatives went to the United States to discuss tariffs. The South Korean authorities have also repeatedly advocated diplomatic negotiations with Washington in order to reduce or eliminate duties.
The United States' closest allies in East Asia have demonstrated behavior that Alexander Korolev, a political scientist, Candidate of political Sciences, deputy director of the Central Research Institute of Higher School of Economics, called a "classic double game" that had already happened between the countries several years ago.
— Japan and South Korea are not fully independent actors, so they have to adapt to the mood of both China and the United States. The same thing happened in 2017, when Donald Trump came to power and launched a trade war against China, partly turning away from Japan and Korea, saying that they themselves should pay for their defense security. It was then that the rapprochement between Japan, Korea and China took place. That is, now we can observe the same processes," Alexander Korolev told Izvestia.
Earlier, Trump imposed duties on imports from Japan and South Korea, which amounted to 24% and 25%, respectively.
In addition, Beijing plans to move closer to the European Union, with which the United States now also has difficult relations, not only because of Donald Trump's tariff policy, but also the different approaches of Washington and Brussels to the Ukrainian settlement. At the end of July, when the 90-day moratorium on the introduction of increased duties ends (it does not apply to China), a summit between China and the European Union is scheduled.
Against this background, Washington is just beginning the negotiation process with more than 70 countries that have applied to the White House to reduce tariffs, Ekaterina Zaklyazminskaya summed up.
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