Why China can and should go all out against Trump in his trade war
China is going the whole hog
in response to US President Donald Trump's
tariff war , showing it is prepared to completely cease trade with the United States. The
European Union and
Canada are stiffening their backs too.
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Trump's tariff salvo is clearly demented, in
basing the rates on trade imbalances. If a country's imports from the US are only 10 per cent of its US exports, Trump interprets it as a 90 per cent tariff – though in his magnanimity, he halves it, ending up with 45 per cent. The twisted logic is that, as long as the US tariff is high enough, trade with the US will be balanced.
But all this will do is reduce trade with the US. Perhaps balance will be achieved once there is no trade on either side. Maybe the road to balancing trade for the US is for its demand to collapse, rather than for its exports to increase.
China has clearly
given up hope of a compromise. Its raising of US import tariffs by the
same percentage as Trump's last week shows its determination to go all the way with the US on this. In addition, China has other means of retaliation.
First, China can cancel the gambling licences of casino operators
Sands China and
Wynn Macau . Gambling is a harmful business anyway. If these American companies leave China, good riddance.
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