Trump s Tariff Run Hits Great Wall of China THE US PRESIDENT HAS MET HIS MATH IN CHINA S XI JINPING

 

In my previous column, I had predicted a ‘Don of Disorder and, in January this year, I had written about the ‘Dawn of the Don Era’. In retrospect, those statements were gross understatements. I had said that Donald Trump is likely to upset neighbours, nations and the economy world over as he becomes the US President who will be a bull in a china shop. As Trump completed 100 days in office on April 29, taking his nation to the brink of an economic disaster, he has promised more torpedoes in the next 100 days.

His rating has dipped to the lowest, but the US President is least bothered. While nations tried to put up a fight against unilateral tariffs as Trump flexed his muscles, it was China that ended Trump’s ‘bull run’ standing up against the US by imposing stiff counter tariffs and sending a shiver to the economic spine of Washington. CHINA-DEPENDENT The US is so dependent on China – from toys to rare earth minerals and chips to cars. As the US economy started to show signs of despair, Trump had no other option but to unilaterally announce the possibility of a reduction in tariffs on Chinese imports. But his apparent willingness to de-escalate America’s trade war with the world’s second-biggest economy has been brushed off by government officials in China and ridiculed online as “chickening out.”

The astronomical tariffs -- a ridiculous 145% -- on Chinese goods will “come down substantially,” Trump announced even as he promised to eschew hardball tactics, vowing to be “very nice” at the negotiating table and even pledged not to mention the origins of the Covid-19 pandemic. But Beijing so far has remained unmoved by the overtures thumbing its nose at Trump and has demanded that Trump remove all tariffs on China and climb down the imaginary tower of power that he has built. “As the saying goes, ‘He who tied the bell must untie it,’” He Yadong, a spokesperson for China’s Commerce Ministry told reporters. BRUTALLY TROLLED “The unilateral tariff hikes were initiated by the US. If the US truly wants to resolve the issue, it should heed the rational voices of the international community and its own domestic stakeholders, fully remove all unilateral tariff measures against China, and find a way to resolve differences through equal dialogue,” he added. Trump was also brutally trolled on social media which said that Beijing had forced the US President to ‘chicken out.’

China has pledged to retaliate against Trump’s tariff threats and stepped up efforts to support the market, raising the risk of a prolonged trade war between the world’s two largest economies. Trump got a shock when China sent back two Boeing planes it had ordered citing the tariff war. Cheap things from China are poised to get pricey in the US. Second-hand retailers are ready to take advantage Companies and individuals are seeing real-world effects, from chipmaker Nvidia to aircraft maker (and top US exporter) Boeing, all the way to people shopping for cheap clothing or makeup hauls on Temu and Shein.

CHINA DIVERSIFYING China has now aggressively been diversifying its trading relationships beyond the US, trying to isolate Washington, since its trade war with the US during Trump’s first administration. China’s exports to the US dropped from 19.2% of its total overseas shipments in 2018, to 14.7% in 2024, said Sheng Laiyun, deputy director of China’s National Bureau of Statistics, at a recent news conference. Beijing is now trying to strengthen trading with the EU, despite the occasional past spat over cheap goods and trade flows. When asked if he was worried about China cozying up to US allies, Trump denied the possibility.

“No, no,” he said. “Nobody can compete with us, nobody.” But China isn’t alone in distancing itself from the US. Many Canadians have already cancelled trips to the US to boycott Trump’s tariff policy. Shops have started refusing goods from the US. Canadian Prime Minister Mark Carney said: “Throughout our history, Canada and Europe have worked together to build up our economies and bolster our shared security. In this time of global uncertainty, we’re focused on making our relationship even stronger. Ursula von der Leyen, the president of the European Commission, echoed those comments noting that more governments, including Canada, Mexico and India, have said they want to work more with the EU. “Everyone is asking for more trade with Europe — and it’s not just about economic ties. It is also about establishing common rules and it is about predictability. Europe is known for its predictability and reliability, which is once again starting to be seen as something very valuable,” she added. TRUMP’S REASONS Trump has unleashed the tariff war for two reasons – to show that the US is still a strong country and that nations should pay obeisance: secondly, to make the US a manufacturing base. But instead of the US emerging stronger, countries like Mexico, Canada and the European Union hit back, stopping the export of commonly used goods in the US.

On the return of manufacturing, it will take decades for the return of manufacturing to the United States and will only lead to inflation. Announcements are easy to make. In the long term, why would companies and other countries decide to invest in the US, which has upended the global economic order in just weeks? The United States moved from a stable economy, a trusted partner in trade agreements and global security, to a source of confusion and doubt in mere weeks after Trump assumed office on January 20. US NOT STRONG Perhaps no one has put it more bluntly than Ursula von der Leyen when she said: “The West as we knew it no longer exists.” In other words: The United States isn’t the only trade game in town. Sure, the US is the world’s biggest economy, with a gross domestic product of almost $30 trillion. But China, the world’s No. 2 economy, is at about $18 trillion, according to the World Bank. And the total value of the European Union’s economy is around 17 trillion euros, or about $19 trillion. “We have 166 members in the organization.

US trade is 13% of world trade. That means that there’s 87% of world trade happening between the other members of the WTO,” according to Ngozi Okonjo-Iweala, director-general of the World Trade Organization. Trump has repeatedly claimed that other countries have been “ripping off ” the United States for years, despite American growth rates that have been the envy of the developed world. So far, he has imposed 25% tariffs on aluminium and steel; 25% tariffs on goods from Mexico and Canada that aren’t compliant with a free-trade agreement; a massive 145% duty on Chinese imports; a 25% tariff on cars, with separate tariffs on auto parts coming at a later date; and a 10% baseline tariffs on all US imports.

CHANGING PLAYING FIELD But those numbers don’t quite capture the whiplash-inducing speed with which Trump has levied tariffs, then walked them back, only to announce more tariffs, with another policy change soon after. The constantly changing playing field has made it even more difficult for businesses and nations to contend with the new policies. The tariffs in place now “will likely slow global economic growth significantly,” Moody’s Ratings said in a recent report. “And the inconsistent approach to policymaking has undermined confidence globally.”

The changes have been not only swift but also deep. “These are very fundamental policy changes,” Federal Reserve Chair Jerome Powell said at an event hosted by the Economic Club of Chicago. “There isn’t a modern experience of how to think about this.” Christine Lagarde, head of the European Central Bank, pressed for European unity. “I consider it a moment when we can decide together to take our destiny into our own hands, and I think it is a march to independence,” she told France Inter radio. Trump’s tariffs will only make the world unite against the US on the economic front

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Courtesy: SHANKAR RAJ  and  Spade A Spade-May 2025