As the world continues to be shaken by armed conflicts, the outline of a new trade war is already looming on the horizon. It is Donald Trump who promises it, or rather threatens it.
The latest appointments for his administration, announced yesterday, strengthen the protectionist credentials of his second term. The conservative Kevin Hassett, future director of the National Economic Council, will have the task of defining the president’s economic agenda. Among the main ingredients there will be duties.
The confirmation comes from the choice of lawyer Jamieson Greer as the new trade correspondent. This is the former chief of staff of Robert Lighthizer, the architect of the tariffs imposed by Trump in his first term, but also of the renegotiation of the North American free trade agreement with Canada and Mexico.
The tariffs decided by Greer’s mentor affected approximately $370 billion of imports from China, which remains clearly Trump’s first target.
The next US president said on Tuesday (November 26) that he will impose “an additional 10% tariff on top of any additional tariffs” on imports from China until Beijing cracks down on trafficking in the chemical precursors used to make fentanyl. During the election campaign he even threatened additional duties of up to 60%.
If he keeps his word, according to analysts, the Chinese economy could suffer an impact of around 2.5% of GDP.
In Beijing, few believe that such far-reaching actions will be taken, also because American families and importers would also pay the consequences (or perhaps above all).
As has happened in the past, many believe that Trump’s strong rhetoric is actually a negotiating strategy.
In any case, China is preparing for the worst. For now we stop at the warnings of diplomats and state media. “There are no winners in a trade war”, is the most common phrase these days, accompanied by commitments in favor of economic globalisation. In the meantime, the arsenal of potential retaliations is being developed.
Among the most talked about hypotheses, there would be the mass sale of US Treasury securities and the strategic devaluation of the yuan. An operation already carried out between 2018 and 2019, useful for reducing the impact of tariffs and supporting the competitiveness of Chinese products and therefore exports.
Even in the face of sanctions and restrictions on supply chains targeted at individual Chinese companies, as happened with Huawei, it is difficult to expect retaliation against American companies. Indeed, in Beijing’s vision, great American managers are privileged interlocutors.
Among them stands Tim Cook, who is currently making his third visit of 2024 to the People’s Republic. The CEO of Apple met with Prime Minister Li Qiang and participated in a forum on the resilience of supply chains, and then praised the relationship with Chinese partners: “We couldn’t do what we do without them.”
The message, contrary to the winds of technological decoupling, is very clear. Despite the turbulence, more than 80% of Apple’s top 200 suppliers have factories operating in China. Promote relationships with Cupertino & co. serves to hope that the giants “made in the USA” can mitigate the action of the hawks who will soon hover around the White House.
And then there’s obviously Elon Musk, who has huge interests in China with Tesla. His presence in the administration suggests the prospect of a “grand agreement” with Trump, which for Beijing has a positive side: the anti-ideological pragmatism of a businessman.
Whatever happens on the bilateral front, China is convinced that it can exploit its isolationism to present itself as a great guarantor of free trade. And thus gain advantages in relations with the countries of the so-called global South. Perhaps, even with Europe itself.
