Taipei, Taiwan – Within a few hours of the US President Donald Trump, the tariffs in China, Canada and Mexico announced over the weekend, his Canadian and Mexican colleagues have backed up with their own taxes for US goods.
The reaction from China, Washington’s greatest strategic rival, was particularly reserved.
The Chinese Ministry of Commerce did not announce any specific tariffs in its answer on Sunday and explained that it would “require appropriate countermeasures to firmly protect its rights and interests”.
The ministry also said that it would question the tariffs of the world trade organization, a largely symbolic measure, since its appellate authority has not been functional since the end of 2019 because Washington’s refusal supports the appointment of new judges.
Beijing’s relatively subdued reaction comes because the US China ties have come to a surprisingly friendly start under Trump’s second government.
In the Davos Economic Forum on January 23 on his first call with the Chinese leader Xi Jinping, Trump said that he believes that the countries have “a very good relationship”.
In a Fox News interview that was broadcast on the same day, Trump said that he would “impose” tariffs in China and express his interest in making a deal with XI.
It is “very plausible” that Trump and Xi see an opportunity for a deal, said Julien Chaisse, expert for international business law at City University in Hong Kong.
“Not necessarily because their wider goals correspond, but because both are active in a world, in which political and economic leverage is constantly calibrated, in which tariffs are just as much as the signal power as the relocation of trade balance sheets- and in which the broader geopolitical Climate often briefly- the conceptual movements are much more than any conventional trade logic that would indicate this, ”Chaisse told Al Jazera.
“This is particularly relevant, since China has always reacted to US tariffs with precision and non -wide retribution measure, which prevents the escalation, if possible, and at the same time ensure that it does not appear weak.”
While Trump’s imposition of 25 percent tariffs for Canadian and Mexican goods is a big shock for the trading system between the three countries – which has been working since the signing of the NAFTA in 1994 as part of a free trade agreement – China has to struggle with taxes on the derivations Exports since his first term.
Trump’s announcement of a 10 percent tariff was also far behind the 60 percent tariff, which he imposed during his re-election campaign for Chinese goods.
According to Deborah Elms, head of trade policy at the Hinrich Foundation in Singapore, the new measures lead to the existing tariffs, the average tariff for Chinese goods of around 20 to 30 percent.
Elms said Beijing’s decision to go to WTO enabled him to make the dispute over the “principles” of global trade.
“Entry to the WTO was a challenge for China because it was a variety of economic reforms and considerable cuts of the tariff rates,” Elms told Al Jazera.
“But China made the case domestically that it is worth it when the advantages of the global trading system were considerable. For this reason, I think China now turns the WTO as part of his strategy to counter Trump. “
Steve Okun, the founder and CEO of APAC Advisors in Singapore, said Beijing could also create his time before he spends other measures.
“It is an opening salvo,” said Okun to Al Jazera.
“It is not done to influence us behavior. The Chinese had to do something. If you do this, you can show both the domestic audience in China and your global audience: “We are following the rules, the USA is not”. It gives them time to find out what to do next. “
China’s message in Washington, DC, did not immediately answer a request for a comment.
Despite a slowdown economy, Beijing is in a stronger position to negotiate with the United States as Canada or Mexico.
China’s gross domestic product (GDP) costs about 19 trillion US dollars compared to the US BIP of around 30 trillion dollars. The GDP of Canada and Mexico are far smaller at around 2.1 trillion dollars or $ 1.8 trillion.
The Peterson Institute for Economic Affairs has estimated that the tariffs in Mexico and Canada could wipe up to $ 200 billion from the US economy in the next four years, $ 100 billion of Canadian economy, and the Mexico economy by 2 percent reduce.
According to analysis of the institute, the tariffs for Chinese goods could reduce the USD 55 billion and China’s economy by $ 128 billion separately.
Carsten Holz, an economic professor at the university and technology in Hong Kong, said that the Chinese political decision -makers are likely to have come to the conclusion.
“There is no hurry for an economic superpower to easily provoke,” said Holz al Jazera. “If Trump escalates his war against VR China, considerable retaliation can still be taken.”
On Monday, the Wall Street Journal, citing unnamed sources, reported that Beijing intends to propose the revival of a trading business that was sealed in 2020 during Trump’s first term.
According to the conditions of the deal, China agreed to buy US goods worth $ 200 billion over two years.
However, the agreement was interrupted by the Covid 19 pandemic and China only fulfilled 58 percent of his obligations, according to the Peterson Institute for Economic Affairs.
Chaisse said that a similar business could be the final goal for the USA and China.
“The lower tariff rate for China compared to the comprehensive 2 percent tariff for imports from Canada and Mexico points more to a strategic than just a purely economic calculation,” he said.
