On March 9, US President Donald Trump used his executive power to order a 25 percent tariff on steel imports and 10 percent tariff on aluminum imports. Some fear this, together with increased anti-dumping investigations, might be a prelude to a global trade war. One expert says chances are slim but the possibility should be taken seriously.
The tariff move has two direct causes: the release of America’s foreign trade data in 2017 – registering a US$566 billion trade deficit, the highest since 2008 – and mid-term election pressure. That's according to Sheng Sixing, vice president of Silk Road National Strategy (Xiamen) Research Center, writing for The Paper.
Sheng further argues Trump’s tariff move was a decision made under pressure, and it’s highly likely the related parties will settle disputes through consultation and compromise. Nevertheless, he cautions that China, the country with whom America has the largest deficit, should be alert to the possibility of a limited trade war.
China should develop a strategic response and punitive measures, and proactively use international rules and litigation measures like the WTO, as well as assessing other measures available within international trade frameworks.
Sheng also says that in the near term, China should promote the completion of talks over the Regional Comprehensive Economic Partnership, and explore the possibility of joining the CPTPP – from which the US withdrew in 2017 – and establishing other free trade agreements. In the long run, he says, China should continue to strengthen supply-side structural reform, and reduce reliance on the US market by stimulating domestic demand and cutting production overcapacity.
Old Version
