When Donald Trump the return to the White House will have new data on Chinese trade surplus with the world this year: for the first time in history, if the trend continues, it will have exceeded one trillion dollars. To the president who described himself as the “Tariff man and whoever defined them as “the most beautiful word in the dictionary” will have no shortage of reasons to do so another new trade war. Analysts take it for granted; its scope remains to be measured.
The imbalance (with positive sign) of trade balance China reached $785 billion in the first ten months. This is an increase of 16% compared to the same period last year and, if there are no surprises until December, it will surpass the psychological threshold of one billion. The accounts allow for some asterisks: for example, the artificial increase in exports due to Chinese producers they empty the warehouses anticipating the battery of tariffs. But in general terms it responds to a consolidated trend. I already am 170 countries those that have a trade deficit with China. The surplus with USA grew by 4.4%, with Europe it reached 10% and shot up to 36% with the Southeast Asiaa market supported by Beijing in these turbulent times.
Him internal consumption According to the Chinese plan, the goal would be to replace exports as the main economic driver. Post-pandemic uncertainty and the housing crisis have ruined it but, in the meantime, it’s a lesser evil that global consumers buy what the Chinese don’t want: it keeps the global factory oiled and keeps unemployment at manageable levels. China concentrates a third of global production and its massive departure fuels suspicions that could lead to a crisis currency war. India It has seen its trade deficit with China double in five years and has already warned it will devalue the rupee if Beijing does the same with the yuan to ease US tariffs.
Threat of 60% tariffs.
In this fragile context, the rebellious president of the United States will emerge. In his diagnosis of the ills that afflict the American worker there is no room for self-criticism. It’s all China’s fault and there is no other cure other than balancing the trade balance. Those tariffs its first trade war to Chinese imports, which fluctuated between 7% and 25%, are ridiculous compared to the 60% promised at the elections.
Trump has different paths, says Anthony Saich, a sinologist at Kennedy School of Harvard. “If you combine that with tighter restrictions on the tech sector, your target will be disrupt the Chinese economy. This is what some of his collaborators and many far-right think tanks want. He could also repeat what he did in his first term and use tariffs as pressure to reach a trade deal,” he says.
The massive recruitment of hawks excludes calm postures. Trump called as Secretary of Commerce Robert Lighthizer, strategist of the previous trade war. In recent years he has vigorously praised tariffs in public debates and has written a book in their defense economic decoupling with China. There are more reassuring factors. Some of Trump’s core supporters, such as Elon Musk, They have abundant business with China and will stop the silo dynamics.
The danger of inflation
Also the inflation who sank Joe Biden will handcuff Trump. Its severity suggests the imposition of tariffs more surgical than the nodule, says Stanley Rosen, professor of political science at the university United States-China Institute from the University of South Carolina. “China is the cheapest supplier of many goods, and taxing them will only hurt American consumers because the distributor will simply add the tariff to the final price. And there are also Chinese goods that American companies’ supply chains need. “Trump will have to carefully decide which imports to apply tariffs to and to what extent,” he adds.
Many economists evaluate rates of 60% as they are implausible for its devastating effects. Him Petersen Institute of International Economics they warned they will weaken economic growth and spark inflation and unemployment. Independent organizations have already made comparisons to the previous trade war hit in the foot. “They are not a bluff, but a basis for negotiation. Trump will get concessions for every product or sector he removes from the tariff list. He knows he won the election thanks to inflation and will be very cautious. It also knows it will have the upper hand if it can squeeze other countries through which China exports, such as Mexico. They will not reach 60%, but China will have difficulty lowering them,” predicts Alicia García-Herrero, chief economist of the Asia Pacific by Natixis.
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What are the potential consequences of China’s projected trade surplus on international relations and global markets?
Interview Between Time.news Editor and Anthony Saich, Sinologist at Harvard’s Kennedy School
Time.news Editor: Welcome, Anthony. Thank you for joining us today. The topic of the hour is the staggering trade surplus China is projected to achieve this year, potentially surpassing a trillion dollars. How significant is this milestone in the context of global trade?
Anthony Saich: Thank you for having me. This surge in China’s trade surplus is indeed a landmark event. It reflects a robust export economy but also exacerbates tensions with trading partners, particularly the United States. For the first time, we’re seeing a surplus reach a psychological threshold that could mobilize heightened political responses, especially from a figure like Donald Trump who prides himself as a “Tariff man.”
Time.news Editor: Speaking of Trump, his rhetoric has already begun to hint at renewed trade wars. Based on your analysis, what strategies might he employ if he returns to the White House amid this trade backdrop?
Anthony Saich: There are a couple of pathways Trump could explore. One avenue is a more aggressive tariff strategy—his campaign rhetoric of levying up to 60% tariffs could certainly come into play. Furthermore, a focus on technology restrictions may allow him to disrupt the Chinese economy significantly. This aligns with how some advisors and far-right think tanks have been advocating for a confrontational approach.
Time.news Editor: We’ve seen an uptick in the number of countries running trade deficits with China, which now stands at 170, including a notable increase with India. What implications does this have for international relations and economic stability?
Anthony Saich: The growing number of countries facing trade deficits with China raises concerns about geopolitical tension. India’s situation, in particular, is precarious—having doubled its deficit in five years and now warning of potential currency devaluations if Beijing responds similarly with the yuan. Such measures could destabilize not just regional but global markets, leading to a cycle of retaliation that can have wide-reaching implications for international economic stability.
Time.news Editor: The article mentions that while China plans to pivot towards internal consumption as a primary economic driver, post-pandemic challenges have hindered this transition. How does this affect China’s long-term economic strategy?
Anthony Saich: China’s ambition to shift towards internal consumption is necessary for balanced growth, especially amidst ongoing global uncertainties. However, external factors—like housing crises and the global demand decline—pose significant hurdles. In the interim, as global consumers buy surplus products, it keeps their manufacturing output stable but also raises questions about sustainable growth. If this shift doesn’t accelerate, reliance on exports will likely lead to increased tensions, especially considering the current trajectory of Sino-American relations.
Time.news Editor: Trump has appointed hawkish figures like Robert Lighthizer to his cabinet. How does this reflect his likely approach to trade policy, and should we expect an isolationist stance or a mix of engagement and confrontation?
Anthony Saich: It’s crucial to recognize that appointing individuals who supported previous policies might signal a return to a more confrontational stance. Lighthizer has publicly backed tariffs and economic decoupling from China. However, Trump also faces domestic pressures, including from some of his supporters with vested interests in Chinese markets, such as business leaders like Elon Musk. This could create tension between isolationist policies and necessary economic engagement, potentially leading to a more mixed approach that seeks both to contain China economically and stabilize certain trade relationships.
Time.news Editor: With the looming threat of renewed tariffs and an inflationary climate that has been affecting consumer markets, what can we infer about the potential impact on global inflation?
Anthony Saich: The threat of tariffs could exacerbate existing inflation woes, which have already been a critical concern for economies worldwide. Higher tariffs on Chinese goods could inflame prices, affecting everything from consumer goods to essential materials. If Trump leans towards imposing substantial tariffs while inflation continues to be a dominant issue, it may lead to a complicated balancing act—not just for the U.S., but for the global economy. The repercussions on supply chains and international prices could deepen economic uncertainty as nations navigate this new landscape.
Time.news Editor: Thank you, Anthony, for your insights. It seems we’re headed towards a complex interplay of trade dynamics, economic strategy, and political maneuvers. We appreciate your time and expertise!
Anthony Saich: Thank you for having me. It’s always a pleasure to discuss these crucial issues.