WASHINGTON – China’s decision Friday to retaliate against the Trump administration’s planned 25% tariffs on $200 billion of Chinese imports instead of waiting for a World Trade Organization ruling shows China “can’t long endure a trade war” because its economy is so dependent on exports, the head of the Alliance for American Manufacturing said Friday.
The Trump administration said Wednesday that it would raise tariffs on $200 billion of Chinese imports from 10% to 25% because of recent sharp declines of China’s currency that would offset the U.S. tariffs.
China on Friday said it will impose 5%-to-25% percent tariffs on 5,207 types of U.S. imports worth of $60 billion. After the first round of U.S. tariffs on $34 billion of goods imported from China, the Chinese government filed a complaint with the World Trade Organization.
“They can’t long endure a trade war,” said Scott Paul, president of Alliance for American Manufacturing. He explained rounds of countermeasures that “China’s economy, really export-dependent, is going to feel a lot of pain.”
U.S.-China trade has long been on an unsustainable path, said Paul. With the U.S. $375 billion trade deficit with China last year, the “U.S. had to push back publicly,” he said.
“China’s new retaliation violates its commitment to the United States and the dispute settlement system,” Jennifer Hillman, an international trade professor at Georgetown Law Center. “This is getting out of control and throwing out the rule book in the way that is going to harm both parties in the long haul.”
The Chinese Commerce Ministry statement said the U.S. “has indiscriminately violated rules and obligations of the World Trade Organization, further infringed on China’s legitimate rights, and seriously threatened our economic interests and security.”
Hillman said that China wasn’t willing to wait for a WTO decision on its complaint.
The recent depreciation of the yuan has put China in a position of having to decide whether to prioritize tariff countermeasures against the U.S. or domestic economic growth.
The number of U.S. manufacturing jobs has been increasing since the tariffs, Paul said, so “we are well positioned to succeed with the right strategy.”
Not everyone agrees.
The U.S. will be losing the China market after this new retaliation, possibly in perpetuity, said John Murphy, senior vice president of U.S. Chamber of Commerce. “Foreign relations are built overtime, and when you break them, you can’t just go back.”