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'Easy' trade wars

Easy trade wars
The latest boast from the US that, "Trade wars are good and easy to win" has boomeranged in a manner it could hardly have been prepared for. Beijing's swift response raised the prospect of a quickly spiralling dispute between the world's two economic superpowers that could even harm the global economy. Now, the United States voiced willingness on Wednesday to negotiate a resolution to an escalating trade fight with China after Beijing retaliated against proposed US tariffs on US$50 billion in Chinese goods by targeting key American imports. Just 11 hours after President Donald Trump's administration proposed 25 per cent tariffs on some 1,300 Chinese industrial, technology, transport, and medical products, China shot back with a list of similar duties on major American imports including soybeans, planes, cars, beef, and chemicals. Cui Tiankai, China's Ambassador to the United States, held an hour-long meeting at the US State Department. "Negotiation would still be our preference, but it takes two to tango. We will see what the US will do," he said. The trade actions will not be carried out immediately, so there may be room for manoeuvre. The publication of Washington's list on Tuesday started a period of public comment and consultation expected to last around two months. If the two countries are unable to settle the dispute, a full-scale trade war could destabilise relations. China's action rattled US farmers, while shares in the US exports of everything from planes to tractors were volatile. While Washington targeted products that benefit from Chinese industrial policy, Beijing appeared to offer a response intended to inflict serious political damage. Washington's list was filled with many obscure industrial items, but China's struck at signature US exports, including soybeans, frozen beef, cotton, and other agricultural commodities produced in the states ranging from Iowa to Texas that voted for Trump in the 2016 presidential election. Trump said last month that "trade wars are good and easy to win," but key fellow Republicans expressed unease over the latest developments because of the political ramifications that would hit them hard. China ran a US$375 billion goods trade surplus with the United States in 2017. Trump has demanded that China cut the trade gap by US$100 billion. The US move was aimed ostensibly at forcing Beijing to address what Washington says is a deeply entrenched theft of US intellectual property and forced technology transfer from US companies to Chinese competitors, charges Chinese officials naturally deny. Much of all this could have been avoided if the 2016 campaign rhetoric had not been allowed to snowball to such an extent.

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