US forgets tariff policies run both ways

Source:Global Times Published: 2018/1/24 6:55:05

The US Trade Representative announced new tariffs on solar panel and washing machine exports on Monday.  The solar panels in question are made in China, and the washing machines are manufactured by South Korean companies Samsung and LG.  

Western media interpreted the move as a signal flare from the US government who could be in the process of launching a trade war against China.

This is not the first time China's solar panel producers have suffered from US trade actions. Ruthlessly imposing high tariffs despite WTO rules is an even greater offense. During the George W. Bush administration, when the US government levied unreasonable tariffs on Chinese steel products, they were immediately refuted by China. 

Trump's latest export measure on solar panels is consistent with his "American First" ideology. It's an action against countries who have the upper hand over the US in trade surplus.  Trump is obsessed with honoring his election promises regardless of the consequences. Engaging in a trade war with China is something beyond his grasp of understanding and control. 

Some will ask if this is indeed a trade war with China or just early steps headed in that direction. 

What matters here is how the supposed boundary between protectionism and a trade war remains out of focus. A trade war can be both regional and global. It seems the Trump administration is angry about the wide gap in trade surplus with China and has evidently lost the sober ability to make strategic decisions.

China has implemented many retaliatory measures towards US trade protectionist behavior. There have been no concerns over how to determine the nature of Washington's high tariff actions on China's photovoltaic products. 

Now China should firmly adopt a normalized reaction to all White House administration behavior. China must not push trade friction between the two in a direction that would deteriorate economic trade relations already in place. Meanwhile, China should not allow the US to get away without paying a price for making unreasonable demands. 

It is possible this latest move is merely a practice run for Trump who could play more tariff tricks with China while in office. But what he needs to know is that China will react to such challenges with appropriate measures. 

Regardless of challenges and conflicts, China and the US are still trade partners. Radical conclusions will not serve either country well. China shall maintain a rational attitude while at the same time take a firm stance on principles.

The first response from the Chinese side should be to file a lawsuit against the US under WTO guidelines. But the issue there would be the prolonged litigation process, which isn't a remedy for critical situations. Given Washington's current strength, litigation wouldn't be an effective deterrent from such future actions. 

The Ministry of Commerce needs to have a few response strategies in place. The purpose here would be to have a response to the US already in place the next time they levy tariffs against China. And should a scenario such as this happen, China is not to hesitate.

There are many countermeasures China could enact against the US. For example, US beef exports have experienced rapid growth in China, but that could change if Beijing decided to raise the bar on its health and safety standards.  China is one of America's most vital trading partners regarding agriculture exports like soybeans and cotton. If a trade war erupted, many nations would have the opportunity to replace the US.

US exports of electric and mechanical parts and other accessories to China are also vulnerable. China now dominates the global automobile market. Last year, the country's sales volume was nearly 70 percent higher than the US market, thus firmly establishing itself as a strategic stronghold for international automakers. 

If not for car buyers in China, US automobile sales would plummet.  Over the years, the appeal of US electronics within the Chinese market has been in decline. Additionally, China could regulate the purchase volume of Airbus or Boeing aircraft.

Lastly, Chinese students have pumped billions into the US economy through tuition, fees, and housing. This revenue stream alone impacts many levels of US society, and China controls it.  

Despite everything mentioned here, it would be easier for China to sell some of its US treasury bonds if necessary. The combined results on the US economy would certainly not add any points to Washington's ruling party.

Trump's determination to start a trade war is questionable since nothing good would come of a Pyrrhic victory for the White House. Any trade disaster would be a political disaster for the entire White House administration.

The US may have a few more advantages when it comes to trade conflict between the two, but they're often overexaggerated. The most important point is that the US trade deficit with China corresponds to the rigid demand of the US people and its industries. 

Even though China is purchasing large amounts of US goods, it has many factors it can use to deal with the US. For example, imposing a tariff on China's PV products would be a hit for the US solar power industry. And the Solar Energy Industries Association has already said the new tariffs would result in massive unemployment. 

The easiest solution would be for US leaders to realize as soon as possible that China is not a tamed sheep they can manipulate. 

Posted in: EDITORIAL

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