Hello, Quartz Index readers!
Yesterday (April 5), US president Donald Trump threatened to levy new tariffs on $100 billion of Chinese products, on top of the $50 billion the White House announced earlier this week. The 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.
Beijing has 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.
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.
But by targeting soybeans, China could be hitting Trump where it hurts 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.”
To win a trade war, the Chinese leadership is armed with ammo that Trump could only dream of: 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 midterm elections draw near. —Zheping Huang
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