As countries across the globe grapple with how to respond to US President Donald Trump’s tariffs, the only country that seemed unperturbed is China, which vowed to “resolutely take countermeasures,” adding that it would fight to the end if the US side is bent on going down the wrong path. However, speaking at the White House on Tuesday, Trump appeared to soften his tone, signaling a willingness to ease the economic pressure after weeks of escalating tensions and retaliatory measures.
While it remains to be seen whether Trump would follow through, the main goal of the tariffs is to stifle China’s economic growth and hamper its military ambitions. If the endgame is China, why are other countries also being hit with “reciprocal” tariffs?
To undermine Beijing, the US needs to start with revitalizing its economy. For that, the US has found a few chinks in its armor, with manufacturing as a major soft spot. The latest data showed that China accounted for 31.6 percent of global manufacturing output, while the US accounted for 15.9 percent. That was a far cry from the peak years of the Rust Belt in the 1940s, when the US represented 30 percent of the world’s industrial output. To force manufacturing businesses back to the US, Trump has offered tax breaks to factories in the country.
On global trade, Trump is using tariffs as a bargaining chip to renegotiate for better trade deals. A case in point would be Vietnam, whose offer of zero tariffs on US imports was taken as “nothing,” because getting rid of tariffs on the US is just a start. Washington’s real aim is for target countries to remove non-tariff trade barriers, such as currency manipulation, technical regulations and other policies that could suppress US exports. Additionally, the countries that are facing the worst of the tariffs are major nations that China is using for illicit transshipments.
Trump might also offer a quid pro quo to lower the tariff as long as the target countries agree to raise tariffs on China. That would force countries playing both sides of the fence to take a stance. Right now, most countries cannot afford to lose the US market.
Coupled with the shift in the US’ defense strategy, Trump’s move would not seem so out of the blue if we take into account the trade war he launched against China during his first tenure. That lasted one year and a half before the two parties sat down to talk and sign a trade deal, in which China committed to purchase US$200 billion of additional US exports, totaling US$500 billion. China ended up buying only US$290 billion. For Trump, that result no doubt signals a failure, whereas from the Chinese point of view, it got away with it by stalling. Trump was voted out of office before it had to follow through with the deal.
China might play the long game again, as Trump is racing against time. The US midterm elections are scheduled to take place in November next year, so Trump has limited time to wield the tariff scythe. That is why he rolled out the policy in such a blunt, fast manner. Any Republican seats lost would result in further impediments to his plan.
For now, the two superpowers are locked in a game of chicken trade tariffs, each daring the other to blink first. For the US, the expected outcome is to force China to sign a new deal, reduce global trade deficits and partner with allies to isolate China as much as possible. The cherry on top would be for Chinese President Xi Jinping (習近平) to fall from power. Meanwhile, China would be seeking to run down the clock while wooing nearby East Asian partners to retaliate with higher tariffs on the US. It would also see the unraveling of US supremacy as desirable. By then, China would consider Taiwan a ripe fruit to pluck.
With the specter of Chinese aggression looming ever closer, Taiwan should always choose the most pragmatic solution by bolstering its military capabilities and strengthening unity. Taiwan must not sell itself short. Its semiconductor industry and democracy are strengths to be used for negotiation.
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