Chinese products have suddenly become much more expensive in the United States, and it's all because of one man, Donald Trump. The US president and his project of additional tariffs on goods from all over the world have hit China hard.
Tariffs have been imposed on goods exported from China to the United States twice since Trump took office on January 20. It was only 20 percent later that it rose to 34 percent. China hit back and imposed a 34 percent import tariff on American goods. This has prompted Trump to warn that China will be hit with an additional 50 percent tariff on Wednesday if China does not remove the 34 percent tariff on goods from the United States. Blackmail, China says.
On Tuesday evening Chinese time, there was no sign that China is softening. That China's leader, Xi Jinping, is giving in to Trump. On the contrary, China's Ministry of Commerce issued a statement saying: "If the US insists on doing so, China will fight all the way".
- If the US escalates its tariffs, China will resolutely take countermeasures to safeguard its own rights and interests.
The ministry also says that it seeks "dialogue" with the US and calls the threat of a 50% increase "a mistake on top of a mistake". The world's two largest economies are in a tariff war. According to the BBC, they account for 47% of global trade. But it is clear that China has already been hit hard.
Reuters writes that since the corona pandemic, China's economy has gradually recovered through increased exports. But if China's exporters do not quickly find other markets than the American one, which is now expensive, dark clouds will appear in the sky. Because China no longer makes any money on the large American market.
- When the 35 percent tariff limit was passed, the profits in the export sector disappeared, says Dan Wang, director of China at Eurasia Group, according to Reuters.
- After that, China should not export anything to the United States at all. The tariff can be raised to 1000 percent, but it would not hurt, because there would be no trade, she adds.
- Europe is and will become the most profitable market for China.
On Tuesday, EU Commission President Ursula von der Leyen spoke by phone with Chinese Prime Minister Li Qiang, where they discussed the situation. They agree that strong trade cooperation is needed in response to the US tariffs.
The South China Morning Post newspaper has spoken to a former advisor to China's People's Bank of China. He does not want to be named, but says, among other things, that China should prepare for more turbulence.
- Trump should see a psychiatrist, he also says.
The advisor is not sure that China should fight back every time Trump comes up with new tariffs. The government should "ignore" it and instead focus on stimulating its economy so that it can ride out the trade storm.
On Tuesday, the NDRC planning commission under the Chinese government held a meeting with companies that export to the United States to discuss what can be done. The NDRC will now coordinate the upcoming work and find measures that can help the companies.
But it is difficult, points out Larry Sloven, who has been a purchaser of Chinese goods for companies in the United States for 30 years.
- It is like throwing a dart blindfolded. You do not know where it will fly. You don't know where the tariffs will hit, he tells Reuters.
- Once the tariff hammer is thrown, we don't know where it will fall.
It is particularly Chinese companies with cheap products that are being hit by a very small profit margin. Like Fuling, which sells plastic cutlery to McDonald's, for example.
According to Reuters, the company says it will establish new production in Indonesia for the US market. But until then, Trump's tariffs will hit hard.
jel /ritzau/
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