President Trump announced this week that a new 10% tariff was coming for more than $200 billion in annual Chinese exports, and even The New York Times was forced to admit that the Red Giant of Communism has little left to respond with. As it was foreseen all along, China’s lack of U.S. imports has made it difficult for them to engage in a long-term trade war with the Trump administration. When Trump hit them with the first two rounds of tariffs – on $34 billion in Chinese goods in July and on another $16 billion in August – China matched the taxes dollar for dollar. The problem now is that Beijing is running out of goods to slap tariffs on.
And that puts them in a difficult spot.
From the Times:
China’s tit-for-tat responses have so far failed to thwart Mr. Trump’s trade offensive, and with the White House amping up the fight again, Chinese leaders aren’t sure how to respond, people briefed on economic policymaking discussions say.
Chinese officials “are generally confused,” said Raúl Hinojosa-Ojeda, a trade specialist at the University of California, Los Angeles, who has been traveling around China speaking with officials, businesspeople and workers.
“They don’t know what to do,” he added. “They worry that the tit-for-tat model is playing into Trump’s hands.”
China doesn’t import nearly enough from the United States to target $200 billion in American goods. But China’s leaders feel they can’t back down. They have presented the trade war as part of a broader effort by the United States to contain China’s rise. The Chinese public could see any effort to soothe tensions as capitulation.
The fact of the matter is that China is out of room to play games, and capitulation is certain to come. Trump did not get into this war to lose; the U.S. trade imbalance with Beijing has been a sore spot for the billionaire since long before the election, and that only scratches the surface of the unfair playing field between the two countries. When you throw intellectual property theft and currency manipulation into the mix, it is clear to any impartial observer that it is up to China to change – NOT the United States. Trump is just the first president with the guts to do something about it.
Beijing will change their ways and negotiate, or they will be in serious economic trouble by this time next year. Trump has them cornered, and he will win.