Contents
Washington’s Tariff Adventures
Since the dawn of his presidency, the illustrious Donald Trump embarked on a tariff-spree, surely pleasing his admirers. Within mere days of setting foot in the Oval Office, he aimed his tariff gun at Canada and Mexico. Although, their robust counteractions compelled him to place these on hold. But China soon found itself next in line.
China’s Response to Tariffs
China, indeed, stands as the second-largest exporter to America, exporting goods worth nearly $300 billion just last year. Thus, they find themselves directly in the path of these tariff attacks. It’s rather evident that the Trump administration’s "tariff revolution" singles out China as a significant target.
Indeed, China isn’t just sitting idly by. Since 2018, they have been bracing for this economic tempest. Their domestic market strategy, known as dual circulation, coupled with a widespread global supply chain and their ambitious Belt and Road Initiative, places them in a far sturdier position presently than in times gone by.
A Potential New Trade Order
If this conflict continues, the global economy might bifurcate into two unique trade alignments. Here, both China and the US might head their respective networks. China, fortified by its bonds with ASEAN, the EU, BRICS nations, and other emerging countries, should fare adequately.
Yet, is this the doomsday scenario that some fear? Certainly not, as China continues forging forward, leveraging its myriad economic partnerships to great advantage.
| Partner Group | Potential Economic Relations with China |
|---|---|
| ASEAN | Strong, ongoing economic ties |
| EU | Mutual trade interests and cooperation |
| BRICS | Joint initiatives and shared objectives |
| Global South | Development opportunities and trade links |
The Consequences of Tariffs on the US
Nevertheless, the US isn’t without its hurdles. American consumers, once privy to affordable Chinese-made delights, now encounter steeper prices. Take the automobile sector as a prime example. The current 100% tariffs on Chinese auto imports render them entirely unaffordable. As a result, American car manufacturers may lag behind, still clinging to outdated internal combustion engine technology.
The Tariff Man’s Vision
Our dear President Trump envisions a return to times akin to the McKinley era, when tariffs ruled supreme, precluding income tax altogether. With advisors like Howard Lutnick, he aims to actualise a tax-substitution theory. This approach, swirling in "economic experimentation", aims to reduce the income tax obligations of his billionaire chums by taxing imports instead. However, to many economists, this is simply a step too far.
Facing the Future: An Economist’s Dilemma
Dismissing this idea as economic heresy might be easy. Yet it seems destined to undergo trial. Tax revenues, previously dependent on income tax, might now rely on tariffs – a notion troubling for many. But only time will tell the repercussions of this strategy.
Conclusion: Embracing Change
For now, the Sino-American trade ties are unlikely to blossom again soon. As the world ponders the unpredictable nature of future trade norms, we can only hope that reason prevails.
The professor’s insights remind us that the future lays in our reactions and adaptations. A hopeful note might be that both the US and China wish to optimise outcomes for their nations within this complex, evolving scenario. Moreover, further reading on the economic impact of tariffs might broaden perspectives for those interested.
We do invite thoughtful discourse and submissions at opinion@chinadaily.com.cn and comment@chinadaily.com.cn. What’s your take on these tariffs and their future?
Professor at the University of International Business and Economics
The author’s opinions don’t necessarily reflect those of China Daily.
