China state media warns Trump against mutually destructive tariff war
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US President-elect Donald Trump said on Nov 25 he would impose “an additional 10 per cent tariff, above any additional tariffs” on imports from China.
PHOTO: REUTERS
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BEIJING – China’s state media warned US President-elect Donald Trump his pledge to slap additional tariffs on Chinese goods
Trump, who takes office on Jan 20,
The two superpowers are setting out their positions ahead of the former president’s return to the White House. Trump’s first term resulted in a trade war that uprooted global supply chains and hurt every economy as inflation and borrowing costs shot up.
Editorials in Communist Party of China mouthpieces China Daily and the Global Times late on Nov 26 warned the next occupant of 1600 Pennsylvania Avenue to not make China a “scapegoat” for the US’ fentanyl crisis or “take China’s goodwill for granted”. “The excuse the President-elect has given to justify his threat of additional tariffs on imports from China is far-fetched,” China Daily said.
“There are no winners in tariff wars. If the US continues to politicise economic and trade issues by weaponising tariffs, it will leave no party unscathed.”
Economists have begun downgrading their growth targets for China’s US$19 trillion (S$25.5 trillion) economy for 2025 and 2026 in anticipation of further tariffs promised by Trump during the election campaign, and are warning Americans to brace themselves for an increase in the cost of living.
“For now the only thing we know for sure is that the risks in this area are high,” said Dr Louis Kuijs, chief Asia economist at S&P Global Ratings, which on Nov 24 lowered its China growth forecast for 2025 and 2026 to 4.1 per cent and 3.8 per cent, respectively.
“What we assumed in our baseline is an across-the-board (tariff) increase from around 14 per cent now to 25 per cent. Thus, what we assumed is a bit more than the 10 per cent on all imports from China.”
Trump is threatening Beijing with far higher tariffs than the 7.5 per cent to 25 per cent levied on Chinese goods during his first term.
“China already has a template for dealing with the previous US tariff policy,” the Global Times quoted Dr Gao Lingyun, an analyst at the Chinese Academy of Social Sciences in Beijing, as saying.
“Using counter-narcotics issues to increase tariffs on Chinese goods is untenable and unpersuasive,” he added.
Chinese President Xi Jinping told former Singapore prime minister Lee Hsien Loong that China’s economy would continue to grow and develop in the long term during a meeting in Beijing on Nov 27 after Trump’s comments, China state news agency Xinhua said.
Senior Minister Lee reportedly told Mr Xi “no one should underestimate the Chinese people’s determination for their nation to succeed and stand tall in the world”, a remark which a separate Global Times piece said was “also meant for some people in (the) international community”.
Profits at Chinese firms fell 10 per cent year on year in October, data showed on Nov 27, showing how companies are struggling to remain profitable in an economy that is far more vulnerable to trade shocks this time round.
Economists in a Reuters poll last week expected additional US tariffs ranging from 15 per cent to 60 per cent.
Most said Beijing will need to inject more stimulus to boost economic growth and offset pressure on exports.
Trade War Two
Trump previously said he would introduce tariffs in excess of 60 per cent on Chinese goods.
The threat is rattling China’s industrial complex, which sells goods worth more than US$400 billion annually to the US and hundreds of billions more in components for products Americans buy from elsewhere.
The President-elect’s pick of trade lawyer Jamieson Greer as the new US trade representative
Mr Greer served as chief of staff to Trump’s US trade representative Robert Lighthizer, who renegotiated the North American free trade deal with Canada and Mexico.
The President-elect looks set to tear up that agreement on his first day in office.
Trump on Nov 25 also pledged 25 per cent tariffs on goods from Mexico and Canada, saying the US’ neighbours were not doing enough to stop drugs and migrants crossing their borders.
But China can expect to bear the brunt of his efforts to bring down the US’ trade deficit and bring about the “manufacturing renaissance” he promised on the campaign trail.
“What the future will bring on this front is hard to say,” S&P Global’s Dr Kuijs said. “There are many uncertainties. There is still a large increase to go to get to 60 per cent.” REUTERS
