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U.S. President Donald Trump and China's President Xi Jinping shakes hands after making joint statements at the Great Hall of the People in Beijing, China, November 9, 2017.
Reuters/Damir Sagolj
No hard feelings.
TIT FOR TAT

China is running out of American goods to slap tariffs on

Zheping Huang
By Zheping Huang

Reporter

In the trade war between the US and China, the ball is once again in Beijing’s court.

Yesterday (April 5), US president Donald Trump threatened to levy new tariffs on $100 billion of Chinese products, on top of the $50 billion that the White House announced earlier this week. The latest move is in response to what Trump calls China’s “unfair retaliation”—a plan to apply reciprocal tariffs on $50 billion of American goods including soybeans and automobiles.

Prior to the reciprocal agricultural tariffs, Beijing had already announced punitive duties on $3 billion of US products, in response to earlier US tariffs on Chinese steel and aluminum products worth the same value.

In its latest statement, China’s commerce ministry said (link in Chinese) that Beijing would fight the US “at any cost”—but Washington’s three rounds of proposed tariffs are so large that China wouldn’t have enough additional American imports to penalize if it continues to seek proportional retaliation. Last year, China exported $506 billion of goods to the US while the US only exported $130 billion in goods (pdf) to China. The White House has already proposed tariffs on Chinese goods totalling $153 billion.

But the absolute number is not the only thing that matters in the spat. China’s most recent retaliatory action—targeting farm products such as soybeans—could be hitting Trump where it hurts the most. China is the world’s top buyer of American soybeans with trade worth about $14 billion last year. Eight of the nine US states that are the biggest producers of the crop voted for Trump. As a Chinese scholar noted to the New York Times (paywall), the US’s agricultural sector is so influential in Congress that Beijing wants “the American domestic political system to do the work.”

Trump has suggested in the past that resolving trade disputes with China is dependent on geopolitical issues such as North Korea and Taiwan. Beijing might well take the same approach. Last week, North Korean leader Kim Jong-un paid a secret visit to Beijing before his potential meeting with Trump, a sign that Beijing is flexing its muscles on the Korean peninsula.

To win a trade war, the Chinese leadership is armed with ammo that Trump could only dream of, such as an autocratic political system united under one man’s indefinite reign in power, and a state-controlled media to rally support for the government. Trump, meanwhile, will have to justify his threats to his constituents as the November mid-term elections draw nearer. 

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