Zhang Xiangchen, China’s deputy trade representative, warned the incoming Trump administration on Wednesday that Trump can’t impose a 45 percent tariff on Chinese products entering the U.S. He says he doesn’t even have the authority to do so and suggested that he must be an idiot if he thinks any differently.
He says that the U.S. is bound by rules set into place by the World Trade Organization – and if he seeks to change them – he will have to make a persuasive case to that organization. He can’t just set the rules himself. Otherwise, he implies, Trump just needs to shut up.
Zhang made the remarks while speaking at the annual U.S.-China trade talks saying further that China doesn’t manipulate its currency any longer, a fact that many economists are even in agreement with. Still, Trump thinks they’re inflating in order to give themselves an advantage.
Let’s put things into context here – China is the world’s second-largest economy. Even if China suffered short-term by a 45% tariff on the $500 billion dollars in goods it imports into the U.S. every year, think about the long-term hit the U.S. would take.
China could retaliate in a number of ways. According to the New York Times, it doesn’t think it’s a fight Trump can outright win. China has too many options at its disposal.
- It could keep state-owned companies from doing business with American businesses.
- It could limit access to essential commodities.
- It could soft-pedal efforts to combat the piracy of American patents and copyrights.
- It could force companies like Apple, for instance, to build components of the iPhone in the U.S. which be almost impossible to do from scratch.
Now the bigger picture – How does this affect the American worker?
An analysis done by the pro-trade Peterson Institute for International Economics concluded that a trade war with China and Mexico (two countries Trump has said he intends to drastically alter our deals with) would increase unemployments in the U.S. to nearly 9 percent by 2020. Guess what? It’s only 4.9 percent now. That’s nearly double.
Trump claims that the main reason he wants to redo these deals is because he wants to put things back into favor for the American worker. But, the ironic thing is, by doing them, he could just make things worse. A lot worse.
Source: News Groops Speak