China’s Upper Hand in Trump-Waged Trade War

Earlier this week, the US-China trade dispute upgraded to a new level as the American government said it was imposing 10 percent tariffs of $200 billion worth of the Chinese products imported to the country to press Beijing to change behavior in relation to intellectual property, market access, and subsidization of the domestic products. The Chinese government responded with $60 billion in tariffs on the American goods. At the same time, the US imposed sanctions on the Equipment Development Department of the Chinese defense ministry for military cooperation with Russia and purchasing Su-35 warplanes and the cutting-edge S-400 air defense systems from Moscow.

With the escalation of the tensions, cancelation of the trade talks between the two economic powers was largely expected. Washington leaders announced new levies on the Chinese goods before the negotiations with the purpose of preparing the climate to extract concessions from Beijing. But China decided to respond to the pressures by calling off the meeting and imposing tariffs on American goods worth of $ 60 billion.

The new tit-for-tat measures come while the past negotiations were far from making great achievements. The last round of trade dialogue between the powers' representatives took place in early June this year, ending without an agreement.

Low-degree China sensitivity to Trump’s trade war

In the first weeks of the President Donald Trump’s trade war against China, the Chinese leaders were deeply worried and frantically reacted to the measures. But now and after four months of the commercial conflict, the Chinese worries and sensitivities have relaxed as the Chinese manufacturers, seeking to cut reliance on the US markets by seeking new consumers in other countries, have managed to find new markets.

The US president accuses China of unfairly and rapaciously stealing the US firms' technology. But the Chinese officials strongly cling to their commercial policies and show no signs of retreat. It appears that at the end of the road, Beijing will foist its business models and trade policies on the US government.

China seeks to punish Trump

China has made it officially clear that it does not seek a trade war with the US. Its reciprocal measures, therefore, are meant to deal a blow to the Trump’s trade policies rather than getting involved in a commercial fight with the US.

On the other hand, China plays the tariffs game very smart. It imposes tariffs on goods which are produced in the American states where Trump has key election support. So, in the trade war with Trump, China intends to inflict damage on the pro-Trump producers and states which are hugely rely on the exports to China for income and in case of intensified war, they will be the top parties to fall victim.

For example, the Chinese target list includes a package of produces like soybean, corn, and cotton. Targeting these products, in fact, deals a blow to the farmers who supported Trump in the 2016 election. Slapping the soybean imports is specifically a smart choice by China to strongly hit the pro-Trump central states. About 60 percent of the American soybean exports are to China. The American farmers are worried that the actions could be followed by a new hit list that will include the citrus exports to China.

The Chinese responses have not been that wonderful in reaching their goals but they at the same time have successfully accumulated the home pressures on Trump who is asked by his critics to review trade hostility toward China. Senator Benjamin Sasse of Nebraska said last month Trump had no plan to win the trade war against China. He said: “He is threatening to light the American agriculture on fire.”  He added that the Trump-imposed tariffs affect a small part of the China-US trade and Beijing's economy overall will not be impacted.

The US National Retail Federation has blasted Trump levies as negatively affecting the American consumers’ buying power.

“Every time this trade war escalates, the risk to US consumers grows. With these latest tariffs, many hardworking Americans will soon wonder why their shopping bills are higher and their budgets feel stretched," Matthew Shay, president and CEO of the National Retail Federation, said.

Additionally, the US tech giant Apple in a letter to Trump's administration on September 5 called for exemption of its smartwatches and wireless headphones, which are produced in China, from the new wave of tariffs. The move was followed by other tech companies like Google and Amazon which called for exclusions from the trade war for cheaper services to the American households.

Some experts suggest that the Chinese leaders aim to punish Trump and his election base rather than being engaged in a trade war with the US. So, as the trade dispute unfolds, further American companies in China should expect damages to their activities, an outcome causing shrinkage in the political backing for Trump in his supporting states.