With latest trade war pressures, both US and China economies may start to see cracks
- New round of tariff increases suggests both sides face growing domestic concerns and a shrinking ability to compromise
- ‘Both think they have the upper hand, which doesn’t bode well for an agreement,’ one analyst says
The latest salvo in the multibillion-dollar trade war between China and the US raises the stakes significantly in the US as the associated costs and losses become more visible not only to farmers but to most American consumers.
China’s announced higher tariffs Monday on US$60 billion in US goods – in response to the Trump administration’s 25 per cent tariffs on US$200 billion in Chinese goods on Friday – suggests that both sides are facing growing domestic pressures, reducing room to manoeuvre and increasing uncertainty, say analysts, farmers and industrialists.
With volleys of recriminations and louder cries to fight fire with fire, it will be difficult for either side to back down as vast swathes of industry and the global economy enter into increasingly perilous territory.
“Both sides are analysing their own economies, domestic pressures, the global situation and both think they have the upper hand, which doesn’t bode well for an agreement,” said Bonnie Glaser, senior Asia adviser at the Washington-based Centre for Strategic and International Studies think tank. “The longer this goes on, the more global the impact is going to be, not just affecting the US economy.”
China appeared close to agreeing on a deal a week ago that included an inventory of laws and regulations Beijing must revise before it reversed and changed the terms, according to Trump administration officials who accused Beijing of reneging. China’s top negotiator, Vice-Premier Liu He, denied any bad-faith moves in an interview with the Hong Kong-based Phoenix Television, adding that adjustments are a normal part of negotiations in the lead up to a final deal.
