Bhubaneswar: Trump has chickened out again from punishing China. He has given them another 90 days extension for the tariffs to kick in. This announcement came hours before the last deadline expire. Trump signed a new executive order and he averted a full blown trade war with the world’s second largest economy, China.
By doing this, Trump gave another demonstration of his double standards. For the past two weeks the US president has been waging a trade war with India. Trump has all but declared an economic war on New Delhi. His rage tariffs on India is 50%. He says India buys Russian oils so they must face tariffs. But China buys more Russian oil than India. Yet Donald Trump is letting that slide. He has given Beijing another three months extension to negotiate. So the new deadline is November.
The US and China have until November to work out the deal and avoid the harsh tariffs. Without this extension tariffs on Chinese imports would have jumped to 145%. China was ready to match that. It had planned 125% duty on US imports.
These were the level that were set in April when Trump first ruled out his swiping tariffs. In the month of May both sides agreed to scale them back after talks in Geneva. Now, Trump’s latest move simply extends that truce.
For this moment the US will keep its rate at 30% and China keeps at 10% tariffs. This is the second extension for China. Trump explained his decision in his briefing, as if has come to a breakthrough. But he know that he is on the backfoot, so only buying time. Tariffs on China has pushed him into a corner. So now he keeps extending deadline because there is no offramp or exit strategy.
In this trade war China has found choke points by identifying areas where it can hurt the US. Beijing is pressing those pain points. There are two main ones: first, the pressure of holiday import. Every year American retailers stock up for Christmas season. It is the biggest shopping period of the year for them. The current tariff game will bring a surge in import during autumn. Most of these goods come from China. If Trump allowed tariff to rise now, the retailers would be forced to pay more and the product would become more expensive.
So either retailers would have lost profit or consumers would have had to pay extra. Trumps extension has prevented that. It will keep the prices in check at lease for the next three months. But China can still hurt the US either delaying or slowing down the exports. It can do this at a when Americans need those goods the most. This is the first leverage that China has.
The second is rare earth magnets. These are critical for US manufacturers. Earlier this China curved the supplies. Then as part of the truce they eased the exports and those supplies have just started to recover. If Beijing wants it can still shut the tap for America. So it ha two levers that it can pull. China can punish US’s retailers and hut America’s rare earth supplies.
The Trump-XI summit possibly to end the trade war. The meeting could happen later this year. Reports say there is one window for late October. But there is no guarantee for relief for the US. Instead of letting off Trump easy XI-Jinping may widen the agenda and put more issues on the table like duties linked to fentanyl trafficking, Chinese purchase of Russian and Iranian oil, and disputes over US operating in China. Each of these issues is a pressure point for the US and if Beijing pressures them up the trade war will only get harder for Trump to escape. This is the reason why the World Trade has given him a nick name, ‘TACO’, Trump Always Chickens Out.
He starts with big threats and pushes until there is a response either from the market or a country’s leadership. When America starts feeling the pressure Trump backs down. China realizes this and it appears to be in no rush to give the US president a way out.
-OdishaAge
