For the good of the world, US, China need to come back to the negotiating table

By Wen Sheng Source:Global Times Published: 2019/5/7 21:33:40

Illustration: Luo Xuan/GT

The US is now known for scrapping multilateral agreements, breaking pledges and using blatant threatening tactics whenever it wants to extract the most concessions from other countries before finally agreeing to put ink on a deal. 

On Sunday, President Donald Trump announced very abruptly in a tweet that he would increase tariffs on $200 billion Chinese imports from 10 percent to 25 percent starting on May 10. The sudden change of course has caught many in the world by surprise. 

Just a month ago, Trump told reporters at the White House that the US will probably "within four weeks" make an "epic" trade deal with China, bringing the brutal 10-month-long trade war to an end. Trump's assertion has brightened investors worldwide and helped global stock markets - from Wall Street, London, and Frankfurt to Tokyo, Hong Kong and Shanghai - rally sizably.

The unexpected hitch by Trump, delivered in a couple of seemingly self-assured and aggressive tweets, no doubt rattled global markets and sent all major trading indexes to a tailspin.

If the Trump administration makes true on his brazen threats on May 10 by raising the tariffs on Chinese commodities, it is almost certain that the extraordinarily stellar bull run of the Dow Jones and Nasdaq indexes over the past 20 months will come to a resounding stop, because any escalation of punitive trade measures by the US will be met with tit-for-tat retaliations from China. A widening trade war between the world's two largest economies won't do anyone good. 

Seriously, most Chinese are indignant about the reverse of course by the Trump administration, because they have pinned much hope on the past 10 rounds of high-level negotiations between the two countries, and for a while they truly felt a deal was within reach. 

What raises their ire most is Trump reneging the consensus he reached with the top Chinese leader at the G20 Summit held in Argentina in December that the world's two largest economies should refrain from raising tariffs and escalating tensions before their bilateral talks bear fruit. 

The following several days will prove to be the most intriguing and eerie. If the next round of trade talks - some call it the endgame - in Washington DC sours and collapses and the Trump administration moves to raise tariffs, the trade war will be effectively escalated and ensnare many in a fierce whirlpool. 

Significant damages will be incurred, hamstringing economic rebounds in both the US and China. At the same time, collateral damages will embroil all other major economies, from America and Europe to Asia-Pacific region. Barring any moratorium, the rekindled trade skirmish is very likely to lead the global economy off a cliff.  

Some claim that the Trump administration is probably emboldened by the unusually strong US GDP growth and employment in the first quarter of this year and is moving to ratchet up a gamble with another raise in tariffs. But the administration can't always be that lucky. 

A souring US economy or a sudden bust of the Wall Street stocks bubble could pop up at any time in the coming months, while the clock is ticking nearer to the November 2020 US presidential election. A worsening economy and rising joblessness will bedevil Trump's reelection hopes. 

Perhaps some in the US administration believe the US has leverage over China, however, huge swaths of the US economy now rely on access to the increasingly dynamic Chinese market for materials, products and sales. Handing over the lucrative China market share to others is the last thing American companies want. 

After all, a win-win reciprocal trade and economic relationship between the US and China benefits the two tremendously, and that symbiotic partnership is a plus for other economies too. We hope the two powers can repair their fraught ties and come back to the route of cooperation and co-prosperity together.

If Trump and his top advisors continue to play their brinkmanship or go further by raising tariffs, China will be forced to retaliate and shut down imports of American soybeans, fruit, meat, energy, cars, jumbo planes and more. More broadly, American corporations having business operations in China will feel the rising pain of an ugly economic war. When farmers, manufacturing workers and corporate titans all start bickering about Trump's strategy, his reelection chances will dwindle. 

The author is an editor with the Global Times.


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