Can Trump win a trade war with China? - The Global Story podcast, BBC World Service

Summary

In this BBC World Service episode, Lucy Hockings discusses the ongoing trade war between the US and China with experts Ritika Gupta and Michael Bristow. The conversation explores US tariffs on Chinese goods, China's countermeasures, and the broader implications for global trade. They highlight how President Trump's use of tariffs aims to balance the trade deficit, with a particular focus on China’s economic influence. Despite growing tensions, the experts note that both countries are preparing for long-term economic strategies. The risks of escalating tariffs and their potential impact on consumers are also examined.

Takeaways

• 😀 Trump has initiated a trade war with China by imposing tariffs, aiming to reduce the US trade deficit and balance economic power.
• 😀 A tariff is essentially a tax on imported goods, usually paid by the importing business, but it ultimately increases costs for consumers.
• 😀 Trump's belief in tariffs as a tool to make America richer is a core part of his economic plan, despite warnings about negative consumer impacts.
• 😀 While Trump's tariffs on Canada and Mexico were paused, his most significant targets have been China, a key economic adversary.
• 😀 China’s response to US tariffs includes retaliatory measures such as increased tariffs on US goods like coal, LNG, agricultural products, and vehicles.
• 😀 Economists warn that tariffs can lead to price increases, hurting consumers and possibly contradicting Trump's goal of reducing the cost of living for Americans.
• 😀 Despite the trade tensions, both the US and China rely heavily on trade with each other, making full decoupling from their economies unrealistic.
• 😀 China's preparation for US tariffs includes diversifying markets and focusing on long-term strategic plans, despite short-term economic impact.
• 😀 The trade war could escalate into a larger global conflict, with other nations potentially being drawn in as either allies or adversaries of the US or China.
• 😀 Nationalism may rise in both the US and China as a result of the ongoing trade war, affecting political dynamics and public sentiment in both countries.
• 😀 President Trump sees tariffs not only as an economic tool but also as a means to exert political pressure, using economic strategies to address non-economic issues like border security.

Q & A

What was the new tariff imposed by President Trump on Chinese goods?

President Trump announced a new tariff, essentially a 25% tax on Chinese goods coming into the United States. This move was a key part of his economic strategy.

Who typically pays for a tariff, and how does it affect the consumer?

While tariffs are technically paid by the importing businesses, many economists warn that the costs are often passed on to consumers in the form of higher prices on goods. This affects shoppers when they purchase items at stores like Walmart or Target.

How did President Trump's tariffs impact Canada and Mexico?

In response to President Trump's tariff threats, Canada and Mexico made significant commitments to increase security at their borders, which Trump saw as a success in using tariffs as a negotiating tool.

Why does President Trump view China as an economic threat?

President Trump sees China as an economic threat primarily due to the large trade deficit between the U.S. and China, where the U.S. imports far more than it exports. He also criticizes China for issues like intellectual property theft and currency manipulation.

How did China respond to Trump's tariffs during his first term?

China responded by raising tariffs on U.S. goods, including agricultural products, and using non-tariff measures such as reporting the U.S. to the World Trade Organization and halting purchases of certain products from the U.S.

What are the specific goods affected by the new tariffs introduced by Trump?

The new tariffs introduced by Trump are mainly on electronics, toys, home appliances, footwear, and other consumer goods like cell phones, TVs, laptops, and game consoles imported from China.

What countermeasures has China taken in response to the U.S. tariffs?

China's countermeasures include minimal tariffs on U.S. goods like coal, liquefied natural gas (LNG), crude oil, agricultural machinery, pickup trucks, and large cars. They also initiated a probe into Google for antitrust concerns.

How could the U.S. tariffs affect the Chinese economy?

The tariffs could hurt Chinese manufacturers that rely on exports to the U.S. at a time when China is trying to boost its economy. However, China has diversified its markets and prepared for such measures by seeking other trade relationships.

Is it possible for the U.S. and China to fully decouple their economies?

Complete decoupling is not realistically possible due to the vast scale of trade between the U.S. and China, with hundreds of billions of dollars worth of trade annually. Both countries are deeply integrated, and while certain sectors may be targeted, full separation isn't feasible.

What is China's general approach to trade, as described in the transcript?

China's approach to trade is transactional, emphasizing a win-win philosophy. The Chinese government sees trade as a mutually beneficial way to achieve prosperity, and this belief underpins their strategy in international relations and trade agreements.