Begun the Trade Wars Have: Will There Be a Global Economic Crisis Thanks to the Escalation?
Day one of the trade war.
The US has imposed $34 billion worth of tariffs against Chinese goods. China hasn't wasted any time and has responded in kind. There are already problems with unloading American containers in Chinese ports.
My colleague Alexandra Suvorova has figured out what the threats were.
July 8th has become the biggest day in trade relations between the US and China. It was today that the US imposed tariffs against Chinese goods. Beijing's respond came immediately. Responsive measures came into force immediately, as the Chinese Foreign Ministry stated. Everyone wondered in which order would the tariffs be imposed. It all comes down to the time zones. China could strike first because when it's the 12 P.M on July 6th in Beijing, it's still 12 A.M. on July 5th in Washington. But China didn't want to be the initiator of a trade war with America, so they stated that they would respond only when America's restrictions were implemented, because, as they emphasized, it was the US who went first down the war-path. And Donald Trump, according to how much he speaks about China, has waited for this day for a long time.
In June, Washington announced additional tariffs against Chinese goods, quote: due to the fact of theft of American intellectual property and technology by China and also because China uses unfair trade practices. This is about introducing 25% tariffs against the Chinese goods for a total of 50 billion dollars. Moreover, there are two stages and the first one starts today, the 6th of July: 818 Chinese goods. These are products of the aerospace industry, car manufacturing, and also robotic and industrial equipment. And according to Trump, he only meant well.
Donald Trump: “I respect China and I respect president Xi. But they've been killing us. Last year the trade deficit was 507 billion dollars. Who would want to lose them? Then you want to do something to make the situation right. And you are attacked. This is unpleasant. This is not the free trade. The trade war was lost many years ago. But now we will win it. And we have all the cards in our hands.”
But China has its own truth. China made perfectly mirrored response: the same day, the same sum. And in both cases, the date of introducing tariffs against the first package of goods is known, but the second one is not. According to Bloomberg, the first wave of China's restrictions will hit the American agricultural commodities, automobiles, and seafood.
Gao Feng, the official representative of the Chinese Ministry of Trade: “The legal rights and interests of all Chinese companies will be protected by the government. As to the influence of the trade war, forced by the US, we will continue to evaluate the situation and we will do our best to help firms cope with possible problems.”
After that Trump announced that he was ready to introduce new 10% tariffs against Chinese goods, but this time to the amount of 200 billion dollars. The stakes are rising, unlike the Chinese exports to the US, which are falling. If in the first half of 2017 the growth was almost 20%, then now it's slightly more than 5%. Experts are sure that the trade war will influence not only the economies of the two countries but also global trade.
Alexey Maslov, the head of the HSE School of Oriental Studies: “This can really have a serious influence on global politics. For example, even here in China, a whole range of economists have started to talk about an upcoming financial crisis, a crisis, like the one in 1998 or in 2007-2008, and this crisis may hit the countries of East Asia and South-East Asia very hard and the rest of the world. So now China is trying to adopt measures which can quell the start of a crisis in China as fast as it can.”
Actually, China has started to defend itself from American tariffs. Despite the assurance of the People's Bank of China that they won't use yuan as a weapon in the trade war, the Chinese currency has already depreciated to dollar. Thus the country covered almost all of the Chinese companies' export losses.
But Donald Trump started the trade war not only with China. In June the US stated that they introduced 25% tariffs against steel imports from all countries, except for several companies from Australia, Argentina, Brazil and South Korea. 10% tariffs are active against aluminum imports. In this case, the restrictions do not account for just several companies from Australia and Argentina.
That's why the WTO has already turned to the most of the countries, including Russia. The problem is starting to become global.