Afrasianet - China's State Council Tariff Commission announced that Beijing will raise tariffs on US imports from 84 percent to 125 percent from the twelfth of this month, while the Chinese Ministry of Commerce called on the United States to cancel tariffs and fully correct its mistakes.
US President Donald Trump has announced raising tariffs on Beijing to one hundred and twenty-five percent with immediate effect due to what he called China's lack of respect for global markets.
Who wins and loses in the bone-breaking battle between Washington and Beijing?
Trump: We may offer exemptions for several countries from tariffs, but not less than 10%
US President Donald Trump announced that the US could make exceptions to new tariffs for a number of countries, but not less than 10% as a minimum.
Asked by reporters aboard Air Force One about making exceptions, Trump said: "Yes, of course there may be some exceptions, but I would say 10 percent is the minimum."
Commenting on the trade escalation with the People's Republic of China, the US president said: "This could lead to good results (for Washington)," adding that "our country is making a lot of money for the first time in a long time."
White House spokeswoman Caroline Levitt has warned that the growing trade escalation with China "will not be good (for Beijing)."
"President (Donald Trump) would be generous if China signals its intention to make a deal with the United States. If China continues to respond, it is not in its interest."
"The United States is the strongest and best economy in the world. Proof of this is that more than 75 countries immediately contacted the administration to conclude a deal. The president wants to do what is in the best interest of the American people."
On April 2, Trump announced "-for-tat tariffs" on imports from other countries. The basic minimum rate would be 10%, but each country would set its tariffs at half of what it charges companies that import U.S. goods. The tariffs imposed on China at the time were 34%.
Trump later announced raising the rate of US tariffs imposed on Chinese imports to 125%, justifying this "China's disrespect for global markets," and at the same time announced the suspension of imposing tariffs imposed on more than 75 countries for 90 days, and reducing them to the minimum rate of 10%.
Trump said it would be a "declaration of economic independence" for the United States and would help use "trillions and trillions of dollars" to repay the national debt.
The World Trade Organization estimated that the volume of trade between the United States and China could fall by 80 percent, due to the exchange of tariffs between the two countries.
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This comes in parallel with similar comments by White House spokeswoman Caroline Levitt, who said: "There is great optimism in this economy. Trust President Trump. He knows what he's doing, and it's a proven economic formula."
But the tension in the global markets, and the confusion caused by the tariffs imposed by President Trump on April 2, have not stopped a day since that date, which Trump called "Liberation Day", the liberalization of American industry, and its return to the United States, which, as the president thinks, sees and believes, is subjected to injustice and injustice, and a lame balance of exports and imports, which he wants with his decisions and executive orders, to change in favor of the "American worker" and the "American nation." and the "American economy". But will Trump succeed in tipping the scales of not only the American economy, but the entire global economy, and can he stop the movement that has become evident towards a multipolar world order on the ruins of a unipolar system dominated economically, politically and militarily by the United States of America without a partner?
The prestigious American economist, professor of Columbia University and head of the University's Department of Sustainable Development, Jeffrey Sachs, believes that the tariffs imposed by President Trump are very similar to the tariffs known as the "Smoot Halley Tariffs" of 1930, which is a protectionist trade measure signed by US President Herbert Hoover in the United States on June 17, 1930, and named after his main sponsors in Congress, Senator Reed Smoot and Representative Willis C. Hawley, and the law raised tariffs on more than 20,000 goods. Imported in an attempt to protect American industries from foreign competition during the start of the Great Depression that began in October 1929. This was a prelude to the Great Depression and the global economic crisis that led to World War II.
Hoover signed the bill ignoring the advice of many leading economists, succumbing to pressure from his own party and business leaders. The tariffs were intended to boost domestic employment and manufacturing, but they deepened the depression, as U.S. trading partners retaliated with their own tariffs, ultimately leading to a sharp decline in U.S. exports and global trade. Economists and historians widely consider this law a political mistake, and it remains a warning example of protectionist policy in modern economic debates. It was followed by more liberal trade agreements such as the Mutual Trade Agreements Act of 1934.
Greek economist and politician Yannis Varoufakis, who serves as secretary-general of the Movement for Democracy in Europe, compared the current situation to what happened during the "Nixon shock," and recalled what Treasury Secretary John Connally told Nixon verbatim two days before he issued the decision to abolish the bond between the dollar and gold: "Mr. President, they (foreigners) are trying to kill us Screw us, and we have to kill them before they kill us."
That unilateral decision eliminated the direct international convertibility of the U.S. dollar into gold, a decision taken by U.S. President Richard Nixon on August 15, 1971 in response to rising inflation.
Although Nixon's actions did not formally abolish the Bretton Woods system of international financial exchange, the suspension of one of its key components effectively disrupted the Bretton Woods system. While Nixon announced his intention to resume the direct convertibility of the dollar after the Bretton Woods reforms were implemented, all attempts at reform failed. By 1973, the Bretton Woods floating exchange rate system had effectively replaced the Bretton Woods system for other world currencies.
Speaking on television on Sunday, August 15, 1971, when U.S. financial markets were closed, Nixon said: "The third indispensable element in building new prosperity is closely related to creating new jobs and stopping inflation. We must maintain the position of the US dollar as a key pillar of stability around the world. In the past seven years, we have experienced international monetary crises, on average one per year. I directed Secretary Connally to temporarily suspend the convertibility of the dollar into gold or other reserve assets, except in the amounts and conditions determined in the interests of monetary stability and the higher interests of the United States. Now, what is this procedure, very artistic, and what does it mean to you? Let me put an end to the problem of the so-called devaluation. If you want to buy a foreign car or take a trip abroad, market conditions may cause your dollar to depreciate slightly. But if you were among the vast majority of Americans who buy American-made products, tomorrow your dollar would be worth equal to its value today. In other words, the effect of this action will be the stability of the dollar.
In turn, Russian economist Alexander Nazarov stated that Trump realizes that globalization is over, and the world has already begun to disintegrate into isolated areas from each other, and also realizes that China will not surrender and will win the trade war, and even if China agrees to US tariffs, this will not lead to the revival of American industry, but will only impose a tax on other countries that will fill the US government budget in a situation that will not be sustainable in any case, and will not "save the leader of the democratic world" a hundred billion here Or there are former servants and allies, who are willing to offer the duties of loyalty and obedience out of habit or fear. "A trivial addition is quite a bit that will slightly mitigate the transformation," the Russian expert put it.
According to Nazarov, the main argument that prevented a hot war between the United States and China was the economic growth of the two countries "like Siamese twins," making war between the two halves of this single economic being impossible. Now "Trump is breaking that connection." Since the economic consequences of the current trade war will be dire, and could lead to increased pressure on Trump at the very least, or destabilize the internal political situation in the United States in the worst-case scenario, it simply means that Trump "must rush to war with China," according to Nazarov, who believes we will soon see "a complete U.S. ban on Chinese imports, and then Washington's attempt to force the world to boycott Chinese goods. Then, after the failure of these attempts, a naval blockade was imposed on China, which may begin with aggression against Iran, cutting off oil and gas supplies from the Gulf to China."
Speaking to Spanish Prime Minister Pedro Sanchez during his visit to Beijing, Chinese President Xi Jinping said: "Together we must confront the unilateral bullying practices of the US administration." Sanchez responded by saying that trade tensions between China and the United States should not affect cooperation with Europe.
At the same time, Xi Jinping will visit Malaysia, Vietnam and Cambodia within days, all countries that share China's tariff damage to China. Trump's ministers will also meet with their counterparts from South Africa, Saudi Arabia and India to discuss boosting trade cooperation.
China and the EU are also reportedly in talks about the possibility of eliminating European tariffs on Chinese electric vehicles, replacing them with a lower price, to curb a new round of dumping.
This means, which economist Jeffrey Sachs agrees with, that the United States is heading towards isolation after confronting most of the countries of the world with its tariffs, and instead of imposing its "rules" on the world, due to its domination of the unipolar world order, the world is about to transform into a multipolar world, perhaps it will finally be able to impose its "rules" on the United States of America, and isolate it if it cannot coexist with the new laws.
This is explained by China's escalation of tariffs on the US, while China's exports to the US relative to China's GDP account for less than 3%.
This means that China has alternatives to movement and maneuvering, and it is actively and effectively moving on a number of fronts to circumvent US tariffs, at the same time, on the other side of the globe, White House spokeswoman Caroline Levitt, in response to a question about the sharply rising inflation expectations (respondents indicated that they are preparing for a 6.7% rise over the next year, the highest inflation forecast reading in the poll for next year since 1981) states that "there is great optimism." in this economy. Trust President Trump. He knows what he's doing, and it's a proven economic formula."
Larry Fink, CEO of investment giant BlackRock, told CNBC: "I think we're very close, if not actually in recession." He added that suspending tariffs for 90 days on most parts of the world "means prolonging and intensifying the uncertainty."
Jamie Dimon, chief executive of JPMorgan Chase, the largest bank in the United States, said the world's largest economy is facing "significant disruption" as a key indicator of consumer confidence falls to its lowest level from the Covid-19 pandemic, the second lowest on record.
U.S. consumer confidence fell 11 percent ahead of Trump's tariff moratorium, according to a regular University of Michigan poll.