President Donald Trump said Wednesday the United States is not in a trade war with China, after Beijing announced plans to impose tariffs on $50 billion worth of U.S. goods in response to a similar package announced by the United States.
In a Twitter post Wednesday, Trump contended, “We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the U.S.” He added, “Now we have a Trade Deficit of $500 Billion a year, with Intellectual Property Theft of another $300 Billion. We cannot let this continue!”
On the same day, White House chief economic adviser Larry Kudlow told Bloomberg News, “None of the tariffs have been put in place yet, and these are all proposals.”
Commerce Secretary Wilbur Ross told CNBC, “Even shooting wars end with negotiations. ... So it wouldn’t be surprising at all if the net outcome of all this is some sort of negotiation.”
Tit-for-tat trade spat
Since the start of this week, the United States and China have been engaging in a tit-for-tat trade spat. On Monday, in response to earlier tariffs on steel and aluminum imposed by the Trump administration, China started tariffs of up to 25 percent on 128 U.S. products, including fruits, nuts, pork, wine, steel and aluminum.
Later the same day, the U.S. Trade Representatives (USTR) proposed to increase tariffs on 1,300 imported goods from China, mostly aerospace, medical and information technology products.
Less than 12 hours later, China announced it plans to impose retaliatory duties of 25 percent on 106 politically sensitive American goods, including soybeans, automobiles and aircraft.
The proposed list is now entering a “public notice and comment process, including a hearing,” the USTR said. After this process is completed, the USTR will issue a final determination on the products subject to the additional duties.
China’s commerce ministry said the question of when the measures will go into effect will depend on when the U.S. tariffs become active.
China’s Ambassador to the United States Cui Tiankai told reporters on Wednesday, “Negotiation would still be our preference, but it takes two to tango. We will see what the U.S. will do.”
White House Press Secretary Sarah Huckabee Sanders reiterated at Wednesday’s press briefing that this measure is now going through the review process, and “it will be a couple of months before tariffs on either side would go into effect and be implemented.”
“We’re hopeful China will do the right thing. Look, China created the problem, not President Trump. We’re finally having a president who’s willing to stand up and say enough is enough, we’re going to stop the unfair trade practices,” Sanders said.
She also warned if China doesn’t stop the unfair trade practices, the administration will move forward to the next step.
Already in a trade war
Scott Kennedy, deputy director of the Freeman Chair in China Studies at the Center for Strategic and International Studies, said he believes that the U.S. and China are already in a trade war.
“It started several weeks ago when the United States instituted penalties on Chinese steel and aluminum, and then the Chinese responded with penalties that also went into effect, so we haven’t just put our guns on the table, we’ve actually pulled the trigger. In the last few days, we’ve announced additional tariffs that will come into effect in the coming weeks. If this isn’t a trade war, I don’t know what one is,” Kennedy told VOA.
Farming first to be hit
At the frontline of this war is America’s farming industry.
China, which buys nearly $20 billion in U.S. agricultural products annually, has become one of the most important export markets for U.S. farmers, but many agricultural products, including soybeans, cotton, frozen beef and sorghum, will be subject to tariffs if it goes into effect.
American Farm Bureau Federation Policy Communications Director Will Rodger told VOA, “Right now, we export about 20 percent of what we produce. We are very, very dependent on exports. We are looking at 25 percent being placed on soybeans into China.
“The actual economic impact will not be good, it will certainly be bad, the question is how large it’s going to be, we don’t know exactly,” Rodger said.
He said farm income is already at a 16-year low, resulting in many farmers in economic distress.
“While we haven’t reached the crisis point, we have one or two more years of declining income, we will be there pretty quickly,” he noted.
Rodger said the current trade dispute is obviously not a good thing.
“We need it to stop, we need China and the United States to sit down and come up with a reasonable agreement in a reasonable fashion,” he added.
Losses in the short term
If the tariffs go into effect, China trade expert Kennedy pointed out, there will be potential job losses by the reduced export opportunities, but the most important impact in the short term will be on the financial markets.
Kennedy said the trade dispute between the U.S. and China is not about how fast this is resolved, but the way it is resolved.
“The issues the Trump administration has raised are issues American presidents have raised with China for almost two decades now, and not made the progress that they want. We shouldn’t be looking for a quick deal and put this behind us, we should be ready for a sustained level of tension until China relents,” he said.
Kennedy said China won’t do that easily.
“China has an economic governance system which is distinctive and critical to the way the Communist Party runs the country, so it’s going to take a lot for them to move fundamentally,” he said.
“The two sides may make some type of short term deal to address superficially the challenges, but this is not something that will go away in the next few weeks,” Kennedy added.
State Department correspondent Nike Ching contributed to this report.