It is time to realise that Trump’s America is not only an unequal partner, but also an unreliable allyby George Magnus / June 5, 2018 / Leave a comment
If you’re not yet been concerned about the outbreak of a global trade war, then perhaps this is a good time to start. None of the world’s biggest trading blocs, the US, China and the EU will be spared—but it is likely to be especially uncomfortable for smaller, open economies like the UK, whose entire trade structure could, in any case, be torpedoed by Brexit.
To recapitulate, President Donald Trump came into office in January 2017 with fiery, aggressive ‘America First’ trade rhetoric. True, Trump pulled the US out of the Trans Pacific Partnership trade agreement straight away and kicked off a renegotiation of the North American Free Trade Agreement (NAFTA) with Canada and Mexico, but for a year very little happened.
Trump and China’s President Xi Jinping met in Florida and later in Beijing, the rhetoric was friendly, supposed agreements were publicised, and all seemed sweetness and light. But from January this year onwards, things have gone from bad to worse.
Initially, the US imposed tariffs on washing machines and a few other products. Then the White House threatened to impose a 25 per cent tariff on steel and 10 per cent on aluminium, which, after an interim period, were recently activated—much to the anger of the EU, but also other allies including Canada, Mexico, and South Korea. The latest on trade between the US and China is that a third meeting of top officials this week ended in an impasse.
Things may go quiet now ahead of the planned US-North Korea Summit in Singapore on 12th June, but the thorny issues of global commerce are sure to revive soon.
If nothing happens to resuscitate the talks, $100 billion of bilateral trade will be at risk in the first instance. China has stated it would void all commitments to buy more US goods, and lower some tariffs.
It would also probably pull back from vague promises to open its markets up to US firms, if the US decides to implement tariffs on China’s key industries.
The US has plans to impose tariffs on a further $100 billion of Chinese exports to the US. China would doubtless retaliate, and no-one can know where this tit-for-tat might end—and at what cost to world trade, the global economy and people’s living…