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Donald Trump escalates trade war with China: His base may suffer

Asia's economy, as well as America's — especially the Trump base — will be hit by president's erratic trade policy


Matthew Rozsa
August 2, 2018 3:30PM (UTC)

President Donald Trump is threatening to further escalate his ongoing trade war with China, a decision that will have major implications for both the U.S. economy and America's bilateral and multilateral relationships throughout Asia.

Trump has requested a review of his proposal to impose 25 percent tariff rates on $200 billion worth of Chinese goods, two and a half times his originally planned 10 percent tariff rate, according to the BBC. The products impacted by the proposed tariffs range from chemicals, minerals and textiles to baseball gloves and fish.

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The Trump administration has long accused China of unfair trade practices toward the United States, and Trump himself has advocated protectionist policies as far back as the 1980s (when the principal target was Japan rather than China). Increasing tariffs on Chinese products is seen by the president ant some of his key advisers as a move that can even the playing field and compel China to alter its behavior toward the United States.

"The increase in the possible rate of the additional duty is intended to provide the administration with additional options to encourage China to change its harmful policies and behavior and adopt policies that will lead to fairer markets and prosperity for all of our citizens," U.S. trade representative Robert Lighthizer told the BBC.

China responded to the news of potential new tariffs by accusing the Trump administration of blackmail. Chinese foreign ministry spokesman Geng Shuang said on Wednesday that if the U.S. "takes steps to further escalate the situation, we will definitely take countermeasures to resolutely safeguard our legitimate and legal rights and interests."

If implemented, these tariffs will not be the first imposed by the Trump administration on China. In March, the White House announced tariffs on $50 billion worth of Chinese imports. As part of that plan, last month the administration levied 25 percent tariffs on $34 billion worth of Chinese imports, prompting the Chinese government to respond with comparable tariffs on American imports. Tariffs for the remaining $16 billion of Chinese imports have yet to be put into place.

Trump's trade policies have already taken a toll on the Asian economy. On Thursday the Shanghai Composite index fell by 2 percent due to investors' fears over the U.S. tariff threat, according to CNN Money. Hong Kong's Hang Seng saw a 2.2 percent drop during this same period, while Japan's Nikkei index fell by 1 percent, Germany's DAX fell by almost 2 percent and France's CAC 40 saw a decline of nearly 1 percent. Because the Chinese economy has been slowing all year, some observers fear that the downward trend in Asian stock markets, combined with the economic hit caused by Trump's tariffs, will significantly hurt the standard of living for the average Chinese citizen.

The ongoing trade war could also impact U.S.-Asia relations in other ways. Secretary of State Mike Pompeo is scheduled to visit Southeast Asia this week to tout $113 million of technology, energy and infrastructure initiatives as part of Trump's "Indo-Pacific" policy, according to a Reuters report published Wednesday. leaders of the nations that he'll be visiting, including Indonesia, Malaysia and Singapore, are clearly concerned about how the trade war will affect their economies. hurt their bottom lines.

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This isn't to say that Asia alone will suffer as a result of the trade war. When Salon spoke with trade expert Ed Gerwin from the Progressive Policy Institute in April, he predicted that ordinary Americans would also feel the burn.

Trump's trade policies have "huge potential implications for the American economy, particularly for the agricultural sector," Gerwin told Salon. "Farm prices move based on threats to the global economy, opportunities in the global economy. And all this saber-rattling with respect to tariffs, I think, is particularly troublesome for the farm sector."

Another problem Gerwin identified is that products imported from China "in many instances are made from components from all over the world. One classic example, he said, is Apple's iPhone, "which really has relatively little Chinese content."

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Gerwin added that Trump's trade war with China is "going to impact a variety of sectors of the American economy. There have been a range of studies that indicate that hundreds of thousands of jobs, if not more, would be lost in sectors impacted negatively by these tariffs."

What concerns Gerwin most, he said, is the prospect of an escalating trade war with no end in sight. "There were initial tariffs imposed with respect to aluminum and steel and now other tariffs that the Chinese have announced. Then the president announced further tariffs with respect to China's intellectual property violations. Then when the Chinese said they were going to retaliate against those, the president said, 'Well, let's just throw more tariffs into the mix!'"

Ultimately, Gerwin compared Trump's trade policies with the economic tactics that contributed to the Great Depression.

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"It's reminiscent of what happened in the late 1920s and early 1930s that led to a real disaster for global trade," he said. "As a nation that increasingly relies on trade — I think something like 14 percent of the economy relies on trade — it's a very dangerous game for us."

Former Sen. Joseph Lieberman, who specialized in trade agreements during his years in Washington, echoed Gerwin's thoughts while speaking to Salon last month.

"There’s only so much we can make and sell to one another," Lieberman said. "For the good of our economy, we've got to be able to sell the stuff we make here, the services we create, around the world. That requires trade. And generally speaking, it’s easier to do business in America than for us to do business in a lot of countries in the world. So the lower tariffs are in other countries, the better our economy is going to be."

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Several of Trump's fellow Republicans in Congress have spoken out against his trade policies, which are also strongly opposed by the Koch brothers and their funding network, the GOP's principal financiers. But so far the party that holds all branches of government has done little or nothing to rein in the president's ability to make unilateral trade policies.

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Matthew Rozsa

Matthew Rozsa is a breaking news writer for Salon. He holds an MA in History from Rutgers University-Newark and is ABD in his PhD program in History at Lehigh University. His work has appeared in Mic, Quartz and MSNBC.

MORE FROM Matthew Rozsa

Related Topics ------------------------------------------

China Donald Trump Free-trade Tariffs Trade Agreements Trade Policy Trade War Trump Administration

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