Trump Doubles Down On Trade War With China After Tariff Strategy Win
The historic win will clear the way for the Trump Administration
President Donald Trump is to double down on his ongoing trade war with China following a significant win in the country’s international trade battles.
Negotiators accepted late on Sept. 30 to sign a new trade accord, the U.S.–Mexico–Canada Agreement (USMCA) replacing the North American Free Trade Agreement (NAFTA).
The historic win will clear the way for the Trump administration to turn its attention to Beijing now.
Trump said that his tariffs are a beneficial negotiation tool, during a press conference to honor USMCA.
“By the way, without tariffs, we wouldn’t be talking about a deal, just for those babies out there that keep talking about tariffs. That includes Congress,” he said
EpochTimes reports that according to Trump, U.S. tariffs are working and will ultimately force China into executing concessions at the negotiating table.
“We have a lot of catching up to do with China,” he said. “We’re using tariffs very successfully to negotiate. And if we’re unable to make a fair deal, then we’ll use tariffs.”
However, he believes it’s too early to talk to China since officials there have dragged their feet on agreeing to end the Beijing regime’s unfair trade practices.
“China wants to talk very badly. And I said, ‘Frankly, it’s too early to talk.’ Can’t talk now, because they’re not ready,” Trump said.
“They’ve been ripping us off for so many years. It doesn’t happen that quickly. And if, politically, people force it too quickly, you’re not going to make the right deal for our workers and for our country.”
The USMCA includes a clause that bars any of the members from opening into a separate free-trade deal with China.
“Entry by any Party into a free-trade agreement with a non-market country shall allow the other Parties to terminate this Agreement on six-month notice,” the agreement text says.
The use of the expression “non-market country” is an obvious reference to China, as, last year, the Commerce Department reaffirmed it was a non-market economy.
Late last year, Canada began formal talks with China for a bilateral trade deal.
According to Canadian media, the USMCA gives the United States “unprecedented leverage” over its partners’ association with China. In practice, Washington can rip up the trilateral pact if Canada or Mexico strikes a deal with Beijing.
The agreement also includes a provision that targets currency manipulation, a trade tactic China has been using for years to boost its exports by undervaluing its currency.
“It’s a great win for the president and a validation of his strategy in the area of international trade,” a senior administration official said on Sept. 30, adding that the new deal “has become a playbook for future trade deals.”
Senate Minority Leader Chuck Schumer (D-N.Y.) also welcomed the rewrite of NAFTA.
“As someone who voted against NAFTA and opposed it for many years, I knew it needed fixing. The president deserves praise for taking large steps to improve it.”
Following the midterms, pressure may grow on Trump to end the tariff war, according to Harald Malmgren, economist and senior trade negotiator for U.S. presidents John F. Kennedy, Lyndon B. Johnson, Richard Nixon, and Gerald Ford.
“The Chinese side decided to wait until its retaliatory trade measures had a greater effect on various U.S. industrial and agricultural interests on voters in the midterm elections,” he said.
The trade pressure between the United States and China has increased as Trump announced in September that his administration would advance with forcing tariffs on an additional $200 billion in Chinese goods.
Trump also warned that if China retaliates against the U.S. farmers and other industries, he will impose tariffs on another $267 billion in Chinese imports.
Trump’s new tariffs came as a surprise to Chinese leaders who called off a planned bilateral meeting in late September.
Malmgren believes a long-lasting tariff argument will pose a threat to supply chains and affect the investment plans of some of the world’s biggest industrial enterprises.
“For example, Japanese and German automotive producers have, in recent years, been expanding production of vehicles inside the United States not only to supply American buyers but to export … to other markets around the world, including China,” he explained.
Mercedes and BMW, for instance, make most of their SUVs in the southern United States, he said, with two-thirds of that, products exported to other countries. BMW announced in July that it would move production for some of its SUVs out of the United States as a result of new tariffs.
China, however, may soon give in to the United States’ trade demands and end the tariff wars as its economic difficulties grow.