As the leaders of Canada and Mexico rushed to respond after the start of a new trade war by him, Chinese President Xi Jinping took a breath before his country announced specific retaliation, according to a Bloomberg report.
Following the threat he made after winning the presidency, Trump imposed 10% on Saturday and 25% duties on both Canada and Mexico, due to their supposed failure from preventing the influx of irregular migrants and illegal drugs.
Within a few hours, Canadian Prime Minister Justin Trinto announced 25% duties to US goods worth $ 107 billion, while Mexican leader Claudia Seinbaum promised payroll contributions.
China’s sluggish reaction
China’s reaction – which came in the middle of a holiday week for the Lunar New Year – was more sluggish, as it was characteristic during Trump’s first term. The Ministry of Commerce issued a statement expressing a strong “discontent” and promised “corresponding countermeasures”, without giving more clarifications. He pledged to file a complaint to the World Trade Organization and called on the US to “manage differences on the basis of equality, mutual benefit and mutual respect”.
With Trump’s contributions coming into force shortly after midnight on Tuesday, Si has a series of tools to respond beyond mutual duties. Options include critical mineral export controls and market access restrictions on some US companies, according to Gary Ng, senior economist at Natixis SA. A series of laws passed by Trump’s first term give China a greater influence on domestic business agreements in the name of national security.
Even so, the situation is more complicated for China than the first trade war, both domestically and abroad.
Unlike before, when China was his top goal, Trump now hit an ally with even higher duties – while others are likely to follow, among other things, against the European Union. This gives China the opportunity to boost trade ties with other nations and can help exporters maintain a competitive advantage.
Wound in American economy duties
Former US Finance Minister Larry Samers calls Trump’s duties “a wound in our own economy that is also great thanks to Si Jing”.
Speaking to CNN, he explained that target countries are unlikely to accept substantial changes in their policy. “Think about what it does to indulge in a bully. It causes more intimidation, “he said.
“At the playground or international relations, bullying is not an ever -victorious strategy. I’ll tell you who the winner is here. The winner here is Xi Jinping. We gave him an excuse for his own financial failures. We went on to drive some of our closest allies in his arms. “
Bump in exports
China’s domestic economy also faces a more precarious situation. Bloomberg Economics estimates that Trump’s duties could have out of order 40% of Chinese exports to the US, endangering 0.9% of China’s GDP.
Exports have done the heavy job to promote growth, as the Si government is supplying manufacturing to offset the fall in the real estate sector. Even before the duties, economists were expecting more fiscal spending to offset deflationary pressure and increase consumer spending – and now it will be even more important for Beijing to intensify its efforts.
“I think China has not made the final decision to retaliate or not – he said he would receive countermeasures, which I think does not exclude duties,” notes Zhiwei Zhang, president and lead economist of Pinpoint Asset Management. “The trade negotiations between China and the US will be a long process. This is just the beginning.
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