- The tariff terrorism unleashed by President Donald Trump across the world has had a telling effect on the stock markets in the last few days. The tumbling markets, even in the USA, must have created a sense of pressure on the maverick President, but as is his wont, he would not accept the same but camouflage with even more belligerence in deriding the countries going against the local interests. However, China has been steadfast in not only standing up to Trump’s overindulgence but also has not hesitated in enhancing tariffs against American products without flinching one bit. The tit-for-tat tariff rise emanating from the two crucial nations has been watched with increasing nervousness by the global community. What’s in store going forward? Let’s dwell on it.
PC: NDTV
- Of course, Donald Trump has paused his reciprocal tariff for 90 days, but only after excluding China from the announced measure. The moot point to ponder here is why other countries shouldn’t think they will escape the consequences of a US-China trade war. As you are aware, Trump is piling on an extra 50% tariff on Chinese exports to the US, taking overall tariffs on Chinese goods to 104%. With this, Washington has started the trade version of a slap fight with Beijing. In response, China hit back and raised its own tariff on US goods to 84%. While some countries have sued for negotiations and are sending trade delegations to Washington, China has said it is ready to fight to the end. Trade fights will not be confined to the US and China. And it won’t be so easy either.
PC: KFOX
- Mind you, Trump is on an unpredictable path – he has now threatened to tariff the pharma industry, impacting India even as New Delhi tries to negotiate a trade deal. Also, the EU has approved a 25% tariff on US goods in another pain-point for global trade. Further, as the largest trading nation and manufacturer, China’s supply chains are like a spider-web that covers the whole world. Untangling from this will be painful no matter where you are on the Trump tariff spectrum. Case in point, for more than 15 years, China’s exports of finished consumer electronic products have exceeded all other countries combined. In 2023, China represented over 65% of laptop and tablet exports and 47% of smartphone exports by value.
PC: The Guardian
- Additionally, China accounted for nearly a fifth of global exports of intermediate inputs like transistors, PCBs, and memory chips. This means that even if an electronic product is made in a third country, chances are its components were made in China. This perhaps explains China’s confidence in this trade war. Reports suggest that Beijing has been developing a retaliatory toolbox precisely for this moment. China is so price-competitive that even with a 100%-plus tariff, Chinese trade volumes to the US could still be 30-50% of earlier numbers. But that won’t be the case for US exports to China. With China far wealthier and powerful now, the potential consequences of cornering Beijing can be hugely and globally disruptive. Trump should keep this in mind.
