US President Donald Trump’s administration may be on course for a fraught relationship with China amid disputes over trade policy, according to Citigroup Inc, which warned the new US government could introduce more protectionist measures against manufactured goods from Asia’s top economy.
“There are growing signs that the Trump administration is heading for antagonistic relations with China,” the bank said in a report that examined how commodities, including metals and farm goods, might fare in the upcoming lunar year.
While the bank stuck with its view that a trade war could be avoided, it did anticipate “increasing trade frictions” between the two.
Photo: AFP
Trump made trade relations a central theme of his campaign, maintaining that the US was getting a raw deal from agreements ranging from the North American Free Trade Agreement to the putative Trans-Pacific Partnership.
The new president hammered on an “America First” message in his inauguration speech on Friday and his administration immediately vowed to withdraw from the Pacific deal.
“We are more likely to see the US aggressively targeting China in sectors where the US runs a large deficit with China or with significant SOE [state-owned enterprise] presence,” Citigroup said.
China has options to react, including bringing cases to the WTO, using countervailing measures and possibly banning exports of strategically important commodities such as rare earths, it said.
Trump has nominated billionaire investor Wilbur Ross for secretary of the US Department of Commerce. In testimony on Wednesday in Washington before the Senate Commerce Committee, Ross called China the most protectionist of the world’s major economies and vowed to level the playing field with the Chinese on trade, especially in reducing overcapacity in its steel industry.
Trump has pledged to use “every lawful presidential power to remedy trade disputes” with China, including tariffs. He once broached a tax of 45 percent on Chinese imports, then denied bringing it up.
Still, the US president has already walked back from some criticisms and so far has not followed up on a pledge to label China a currency manipulator on his first day in office.
Still, Xinhua news agency congratulated Trump on his inauguration and said it hoped for “win-win” cooperation between the two nations, and an editorial run by state-backed China Daily took a similar tone.
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