The United States and China are now in a trade war. The foot soldiers in this kind of action – import duties – are being massed on each country’s borders. The question is, will the duties be deployed, or is a negotiated peace still possible?
If any person other than Donald Trump were U.S. President, the answer would be yes. But his unpredictable and resentful nature forces us to downgrade to maybe.
Mr. Trump’s government announced Tuesday it will impose an additional 25 per cent duty on 1,300 Chinese imports, mostly manufacturing components and machine parts. Beijing has responded with a list of 106 American imports that will get the same treatment, but has focused on things like cars, planes and soybeans.
This follows the news on Monday that China is imposing retaliatory duties on 128 American products, mostly agricultural ones, in response to Mr. Trump’s earlier announcement of tariffs on Chinese steel and aluminum.
The latest round of duties won’t be in effect before late May, because the U.S. first has to go through a consultation process. Beijing is holding its fire in the meantime.
This waiting period presents an opportunity for Chinese and American officials to start talking. Both countries have good reason to allow that to happen.
The U.S. has legitimate beefs with China’s trade practices, which are blatantly weighted in favour of domestic and state-run companies, and which force foreign companies to share their intellectual property. But Mr. Trump can’t afford to be stubborn and alienate voters in farming and manufacturing states whose products are being targeted by China’s duties.
Beijing doesn’t worry about elections or voters, but it is just as vulnerable to the harm caused by a drawn-out trade war. More broadly, the global economy is humming along. Why pull the handbrake on it?
If Mr. Trump used the moment to bring China to the table in a spirit of mutual compromise, some good could come of both countries’ belligerent posturing.
In a normal world, that’s what would happen. But in a normal world, Mr. Trump’s trade war wouldn’t have started in the first place.