The Chinese consequence to the American Customs War: Rational exclusions vs. Trump's economical ruin

chiny24.com 2 months ago

US-China Customs War: How Washington's unthinkable decisions destruct the global economy while Beijing seeks solutions

Faced with the escalation of the trade conflict between the US and China, it is increasingly apparent that the Donald Trump administration, imposing further tariffs, operates without a long-term strategy, while Beijing takes balanced steps to reduce damage. Reports show Nikkei Asia, China is considering excluding part of American products from advanced retaliatory duties while the US continues its economical suicide policy.

China shuts down key products, USA increases chaos

According to Michael Hart, president of the U.S. Chamber of Commerce in China (AmCham), the Chinese Ministry of Commerce consults companies with products that cannot be replaced by imports from another markets. The list was headed by medicines and medical equipment that the deficiency of which could endanger citizens' health.

“The companies will not be able to commit to fixed prices unless they know the cost of their investments” – explained Hart, pointing out the absurdity of the situation where tariffs destabilise even the wellness sector.

Moreover, Chinese media reported the exclusion from customs of 8 semiconductors from the US, although the article rapidly disappeared. At the same time, a list of 131 products circulating on the Internet, from ethanol to aircraft, to be exempted from fees. 2 sources confirmed the editorial Nikkei Asia the authenticity of the paper and any importers have already received oral confirmation from the Chinese customs authorities.

Trump says there's talk. China is denying

While Trump maintains that negotiations are ongoing, Beijing powerfully denies it. A spokesperson for the Chinese Ministry of Commerce stated that the US should “Totally abolish all unilateral duties imposed on China”If they want a solution to the conflict.

Experts point out that China, despite its tough attitude, is aware of economical costs and gradually limits the scope of repression.

“Common duties are likely to become reciprocal reductions – this is an acceptable solution for both parties” – rated Xu Xiaofeng from Sandler, Travis & Rosenberg.

World economy in problem by the work of the US

The effects of the customs war are already visible:

US imports from China decreased by 64% in the first days of April After the fresh tariffs have been announced.
IMF lowered global growth forecast by 2025 to 2.8%, partially due to a slowdown in China (a discount from 4.5% to 4%).
Chinese ministers inform against “economic fragmentation”that destroys supply chains.

“Customs and trade wars undermine economical and financial stability” “The Minister of Finance of China Lan Fo’an alarmed.

Beijing's not going to start much stimulation.

Unlike many economists, China has not announced a broad stimulus package.

“Pekin takes his time with quite a few stimulation. It takes time to measure the magnitude of the trade shock" said Zhang Zhiwei of Pinpoint Asset Management.

Meanwhile, the AmCham study shows that 21% of US companies no longer consider China a precedence investment target That's twice as much as before the pandemic. Concerns have besides been raised about the oversupply of industry, which causes price wars in industries specified as automotive and food.

Is there any chance of a solution?

Robin Xing of Morgan Stanley predicts US tariffs may fall to 60% by the end of June and 34% by the end of the yearIf both sides start talking. But even then, restoring trust will be hard – the AmCham study indicates that “Raising tensions in US-China relations” is the biggest challenge for business and regulatory risks (e.g. data) are increasing.

The U.S. plays roulette, China seeks a way out

While Trump escalates the conflict without a clear plan, Beijing operates methodically – excluding key products, avoiding panic stimulation and waiting for the U.S. to feel the effects of their policies themselves. As Hart of AmCham noted:

“Customs will stay in strategical sectors. Beijing will not reduce them unless Washington does.”

Will the United States realize that there are no winners in the customs war? For now, it seems that China is the only organization to effort to reduce losses.

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