Thomas Gallatin / August 26, 2019

As Trade War Escalates, China Calls for Calm

Trump ups the ante on tariffs following China’s imposing $75B in new tariffs on U.S. goods.

Over the weekend President Donald Trump was in Biarritz, France, for the G7 summit. However, the world’s attention was on Asia following the latest dust-up between China and the U.S. in the ongoing trade war. Following Beijing’s announcement of new tariffs on $75 billion in U.S. goods, Trump blasted China with tariffs on another $550 billion in Chinese products. A clearly agitated Trump had earlier issued a statement that brought a wave of condemnation — he “ordered” American companies “to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA.”

Obviously, the president cannot compel U.S. companies to do as he says; America is not communist China. But that’s the point — it appears that Trump’s message was primarily intended for Beijing. He rightly blames China for this trade war and has no intention of backing down. Indeed, Trump’s comments in context demonstrate his thinking: “Our Country has lost, stupidly, Trillions of Dollars with China over many years. They have stolen our Intellectual Property at a rate of Hundreds of Billions of Dollars a year, & they want to continue. I won’t let that happen! We don’t need China and, frankly, would be far better off without them. The vast amounts of money made and stolen by China from the United States, year after year, for decades, will and must STOP. Our great American companies are hereby ordered to immediately start looking for an alternative to China…”

News of the latest round of tariffs sent markets plunging, especially the Asian markets. In an effort to mitigate some of the effects of Trump’s tariffs by making Chinese goods cheaper, Beijing let its currency, the yuan, drop to an 11-year low. However, by early Monday Beijing was signaling to Washington that it wants to “calm” things down to seek an end to this trade war. Trump’s announcement on Sunday that Japan and the U.S. had agreed “in principle” to a new bilateral trade deal may have also played a significant factor in China’s sudden call for calm.

Again, this ongoing trade war is one Trump did not start, but he has willingly taken up the fight. It’s no secret that China has been playing dirty on trade for a long time. And it’s not as if Beijing has suddenly decided to change its ways. Earlier this year, Vietnam accused China of mislabeling its products as “Made in Vietnam” in an effort to avoid U.S. tariffs. While there is no way to avoid the impact of fighting this trade war, and there’s plenty to criticize Trump over, one thing for which he should rightly be commended is his willingness to stand and fight for the American people.

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