Donald Trump, former US President and currently the leading contender in the race to secure the Republican nomination for this year’s election, has promised to impose further tariffs on Chinese goods if he’s re-elected in November.
In a Fox News interview, Trump said any new tariffs could be higher than 60%, claiming that while he doesn’t want to hurt China, its “really taken advantage of our country”.
Trade war II
Trump has laid out an aggressive trade stance since announcing his second presidential run, stating last year that he would “tax China to build up America”.
He also planned to eliminate China’s most favoured nation (MFN) status, which under WTO rules requires a country to offer the same basic trade terms to all WTO members, paving the way for targeted action while stripping China of its legal recourse to complain.
Trump’s first presidency saw him instigate a trade war with China, imposing US$250bn in tariffs on the world’s second-largest economy during his term.
Beginning in 2018, Trump quickly escalated trade measures, beginning with general import tariffs on goods and materials such as steel, aluminium and solar panels, which hit Chinese producers, before progressing to 10% tariffs on US$200bn of Chinese imports by the year’s end.
Secret talks
In contrast, the New York Times reports that a delegation from the US Treasury is set to visit Beijing with the aim of holding more constructive economic talks.
Discussions are reported to be focused on a US-driven agenda, including China’s subsiding of key industries and consequential industrial overcapacity, and the debt burden created through its Belt and Road initiative.
Representatives will also discuss growth amid a challenging macroeconomic backdrop and how to tackle climate change.
Following the “Trump trade war era”, re-establishing talks has been seen as an important marker of cooperation between the two countries, with hopes that Treasury secretary Janet Yellen could make a second trip to Beijing.
Biden era
Despite Trump’s claims that Biden’s industrial policy reflects a “pro-China, globalist agenda”, the protectionist approach he introduced has remained largely intact throughout the Biden presidency.
The Inflation Reduction Act, first introduced in 2022, subsidies domestic production of green technology including electric vehicles, batteries and solar panels, eliciting outcry from US trading partners who feared the measures would damage their own industry.
Elsewhere, there have also been new export controls clamping down on the sale of goods such as high-processing semiconductors, for fear they’ll support technological advances with military applications.
Tension over the need to restrict sales culminated in the heads of prominent chip producers Intel, Micron and, most notably, Nvidia being brought before the House of Representatives China Committee to testify before Congress last month.
Chip pushback
The FT reports that China is ramping up production of chips to move away from its existing US dependency.
Capitalising on telecoms giant Huawei’s pivot into wider technology, chipmaker SMIC has opened production lines in Shanghai.
In the race to downsize chips while boosting processing capacity, China would still be behind its US counterparts. The new chips produced by SMIC will be 5-nanometers and serve to upgrade Huawei’s upcoming smartphone model.
Although still behind the cutting-edge, 3nm models produced in South Korea and the US, commentators remarked on China’s significant progress amid US controls, following the release of Huawei’s Mate 60 Pro smartphone model last August, which boasted domestically produced chips.