Hong Kong – A significant increase in tariffs, followed by equally significant retaliation. Chinese nationalist bloggers comparing Donald Trump’s taxes to a statement of war. China’s Foreign Ministry promising Beijing “will” fight to the end. ”
For years, the two largest powers in the world flirted with the idea of economic decoupling as tensions between them increased. The acceleration this week of the deterioration of the business relationship made the perspective of such divorce seem closer than ever.
This was underlined on Wednesday (9), when China announced an additional 50% tariff on American products, equaling new US taxes that had entered into force hours earlier. China has also hit US companies, imposing export controls on a dozen of them and adding six to a list of “unrivable entities”, preventing them from doing business in China.
China’s new tariffs, which will come into force on Thursday (10), mean that all American products sent to China will face an additional 85%import tax. The US minimum tax on Chinese imports is now 104%. Both numbers would be unimaginable a few weeks ago.
With China’s top leader, Xi Jinping, and Trump trapped in a winning game before – each reluctant to look weak when making a concession – the commercial dispute can be further out of control, inflammating tensions in other competition areas, such as technology and Taiwan’s fate, the Beijing autonomous island.
Trump’s aggressive tactics make him a unique force in US politics. But in Xi, he faces a hard opponent that survived the turbulence of China’s political purges in the late 20th century and that sees the competitive tactics of the United States as ultimately intended to subvert the legitimacy of the Communist Party in power.
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“Trump has never been involved in a street fight where the other side is willing to fight and use the same tactics as him,” said Scott Kennedy, senior counselor at the Center for Strategic and International Studies, a Winington Think Tank. “For China, this is about its sovereignty. This is about maintaining the power of the Communist Party. For Trump, it can be just a political campaign.”
China’s economy, which was already in a vulnerable state due to a real estate crisis, now faces the spectrum of a global recession and a devastating trading deceleration, its defining industry and the main growth engine. In a sign of Beijing’s growing discomfort, Chinese censors seem to be blocking searches on social networks by hashtags that refer to number 104, such as US tariff size.
“This is a great shock for the economic relationship between China and the US, as an earthquake,” said Wu Xinbo, director of the Fudan University Institute of International Studies in Shanghai, referring to the tariffs imposed on Wednesday. “It remains to be seen if this is a temporary turbulence or an inevitable long -term trend.”
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Certainly, a decoupling between the US and China is still far from reality. Chinese and American companies such as Tiktok and Starbucks are still deeply rooted in each other’s countries. And Chinese banks remain linked to the US dollar -dominated financial system.
China and the United States are still in the “BrinkManship” phase [estratégia diplomática que consiste em forçar uma situação perigosa para alcançar um resultado favorável]Kennedy said, each trying to force the other to offer a knee agreement. But the dispute may become more dangerous if the Trump government attack Chinese financial institutions-for example, revoking Chinese banks licenses in the United States or expelling them from the SWIFT international payment system.
In opposing Trump’s actions, Beijing presented himself as a victim of unjust business practices and US protectionism. The irony is that China has done the same, if not worse, over the decades, limiting foreign investment and subsidizing Chinese companies.
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Xi made no direct comment on the new US tariffs. On Wednesday, however, shortly after the tariffs were entry into force, the Chinese state media announced that he gave a speech at a meeting with the other senior members of the Polytburo Permanent Committee, the apex of power in China, as well as other senior employees. In this speech, Xi asked the officers to strengthen the ties with the neighbors of China and “reinforce industrial cooperation and supply chains.”
A spokesman for China’s Foreign Ministry, Lin Jian, addressed the new tariffs, saying on Wednesday that China “will never accept such arrogant and intimidation behavior” and that “will definitely retaliate.” The new rates were announced hours later.
Any fracture between Chinese and American economies will be felt around the world. The business was the basis of the bilateral relationship for almost five decades. Without this, their engagement on other global issues such as security, climate change and future pandemics and financial crises will probably stagnate.
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China tried to minimize its vulnerability to economic chaos triggered by the Trump government. She claims to have reduced her dependence on American markets for her exports and that her economy is becoming more self -sufficient, especially with regard to the development of her own technologies.
But this covers serious problems in the Chinese economy, which has been widely stagnant due to the collapse of the real estate market. In addition, Trump’s attack on the global commercial system, which includes targeting in countries such as Vietnam, where Chinese companies have opened factories to circumvent previous US tariffs, reaches the core of one of China’s current economy today.
The consequences of commercial breakup will affect the United States, which depend on China for all types of manufactured products, but will cause more damage to China, said Wang Yuesheng, director of the Institute of International Economics of Beijing.
“The impact on China is that Chinese products have nowhere to go,” said Wang. This will devastate export -oriented companies that make items such as furniture, clothing, toys and appliances along the east coast of China, which exist mainly to serve American consumers.
Beijing’s strategy is now to resist the United States and expect Trump to succumb to internal pressure to reverse the course, said Evan Medeiros, professor of Asian Study at Georgetown University, who acted as Asia’s advisor to President Barack Obama.
“They know that if they give in to pressure, they will face more pressure,” he said. “They will resist the belief that China can withstand more pain than them.”
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