Trump’s understanding of tariffs limited

Source:Global Times Published: 2017/8/28 23:48:39

US online website Axios revealed Monday night that US President Donald Trump vented his ire at senior staff in a small Oval Office meeting in early August, saying he was not satisfied with the administration's plans to investigate China's alleged theft of intellectual property and wanted his staff to show him plans to raise tariffs on Chinese goods. "Tariffs. I want tariffs."

Many US mainstream media cited the report, whose authenticity is unknown. But US media seems to believe the revelation is true. If Axios' report is true, what happened in the meeting went contrary to the trade dealings between China and the US thereafter, which is worth pondering.

The exclusive account suggests that Trump has a limited understanding of the real meaning of tariffs. He takes it as an extreme tool which can bring fast and effective results. But it's a misconception. Raising tariffs without justification runs counter to WTO principles. The disruptive effect it brings to bilateral and multilateral trade has been repeatedly witnessed.

The Smoot-Hawley Tariff Act that the US adopted in 1930 raised US tariffs on over 20,000 imported goods. The act was met with retaliatory measures by other countries, including Britain, France, Germany and Canada, leading to devastating results. US exports fell by 61 percent from 1929 to 1933 and imports shrank by 66 percent, while its GDP declined 50 percent, further compounding the recession.

Trump's aides have served as a buffer to the president's radical requests, preventing the US' policy on China from turning into an immediate trade war. China and the US continue to engage in a back-and-forth rivalry instead of heading to a showdown. The "Section 301" investigation will last about a year, which offers room for negotiations.

The leak of such information might have been intended to further pressure China and seek a bigger concession from Beijing. The scheme works better than Trump's order to raise tariffs.

Six months into his presidency, Trump is more entangled with trade issues than previous administrations. China and the US will face more pressure of a possible trade conflict in the years to come. China should not overly focus on the Trump administration's actions. Instead, it should begin drafting retaliatory measures against the US so as to gain an upper hand.

There is no need for us to feel nervous about Trump's remarks as closed-door meetings tend to be more open and intense than speeches. In China's discussions on the US, some people are more hawkish in private.

China's status as a trade powerhouse cannot be easily changed. China-US trade is based on mutual benefits, which is a source of our confidence. Trump is a realistic president. The longer he is in office, the more he will understand the real scenario of China-US trade and he will be less likely to take unrealistic trade protectionist actions.

Posted in: EDITORIAL

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