Tariffs and a trade war are definitely going in the wrong direction. Trump and his team should cast aside all illusions that China will capitulate and that the U.S. can survive the tariff war. The only wise choice is to dump the tariffs and come to the table for talks.
Spokesmen for the Chinese Foreign Ministry and Ministry of Commerce have said bluntly that there are no China-U.S. talks going on and that any “talk” emanating from the U.S. side contains a lot of fake information.
The Trump administration has said that the current 145 percent tariff level is too high and unsustainable, and that bilateral talks are ongoing. However, the Chinese government has made it clear that all unilateral tariffs imposed on China must be removed before any talks can begin.
This surprised the White House, whose imagination has conjured up a tariff stick in the hands of the United States under whose abuse China will make concessions in exchange for a lower rates. In other words, the U.S. sets the rules and China follows meekly. The U.S. doles out punishments and China gives in to stop the pain. If it does not yield, the U.S. tariffs will escalate until it does.
Trump and his team didn’t expect that China would make zero concessions. On the contrary, China retaliated immediately and strongly, not only with tit-for-tat countertariffs on U.S. goods coming to China but also with a series of bans and restrictions. Washington did not expect that China would be immovable and demand a total scrapping of tariffs before sitting down to talk. It did not expect China to fight.
Why is China so firm? First, because it is defending its sovereign interests. Both China and the U.S. are equal members of the United Nations, so the U.S. can only talk with China on the basis of equality and respect. It has no right to force China to do anything.
The White House first imposed a 20 percent tariff on Chinese goods because of the fentanyl problem, which was unreasonable. Then it announced a 34 percent “reciprocal tariff” rate on Chinese goods. When China countered with a 34 percent tariff on U.S. goods, the White House escalated by another 50 percent, raising the total tariff rate to 84 percent. When China then added 50 percent, the rate escalated again to 104 percent, and then to 145 percent. Trump imposed his personal will on China and did not permit self-defense. He demanded that China kneel to his will, with no equality, no mutual respect, no mutual benefit. Hence, China had every reason to fight back.
Second, China is defending world trade and the rules-based multilateral trading system. America’s unilateral tariff is a brutal violation of World Trade Organization rules. The core principle of the WTO is a multilateral one: most-favored nation treatment, with tariffs decided through negotiations.
No individual member has the power to impose a new tariff on another member unilaterally. Therefore, the Trump tariff war against China and the world is not only illegal but also poses a tremendous challenge to the multilateral trading system. It is a disaster for world economy and trade.
The International Monetary Fund has scaled down its global GDP growth estimate by 0.5 percentage points this year, and the WTO estimates a global drop in the merchandise trade of 0.2 percent. Both moves arise because of Trump’s tariff aggression. China, a leading member of the WTO carries great responsibility to defend the rules-based multilateral trading system for the stability of the world economy and maintenance of trade flows. The official position of China is consistent in the multilateral and bilateral framework. Multilaterally, China has sued the U.S. at the WTO, demanding a total scrapping of the tariffs. Bilaterally, China must also demand the same thing.
Third, Trump’s “reciprocal tariffs” have no economic rationale and are harmful. It was calculated as a 50 percent U.S. merchandise deficit rate for the target partner. There is no logic to this in basic economics. And there are many oddities. For example, the reciprocal tariff rate is 20 percent for the EU, but the U.S. has a $55.5 billion surplus with the Netherlands and a $6.3 billion surplus with Belgium. The reason given was a need to cut the trade deficit. Again, there is no logic connecting tariffs with trade balances.
In the 2013-16 period (the second Barack Obama term), no massive tariffs were imposed, and the U.S. global trade deficit grew by only $4.8 billion. During the first Trump term, however, massive tariffs were imposed on Chinese goods and others, leading to $160.6 billion rise in the U.S. global trade deficit. During the Biden administration, when the Trump tariffs were retained, the U.S. global trade deficit rose astonishingly by more than $300 billion.
The 145 percent tariff on Chinese goods has caused tremendous supply chain disruptions across America. There have been frantic shopping sprees and massive protests across the country. American retail giants had an emergency meeting with Trump, strongly appealing for a stop to the tariffs. They said there would be empty shelves in supermarket all over the country by May, resulting in massive bankruptcies for retailers.
The latest Michigan University consumer confidence index for April fell to 52.2, close to the historical low, and the expectation for inflation over one year was 6.5 percent, the highest since 1981. Trump and his team may not know that the U.S. is highly dependent on Chinese supply lines. In October 2024, there were 2,665 items in the U.S. import lineup from China that represented at least 50 percent of the importation of those items. Together these items accounted for 24.2 percent of total imports from China to America, including 500 items for which the U.S. was 100 percent dependent on China.
More than 70 percent of the world’s lithium batteries, air-conditioners and cooking utensils; plus 80 percent of mobile phones, toys, electric kitchen appliances; plus 90 percent of the world’s solar panels and processed rare earth minerals originate in China. It has been estimated that if the tariff situation lasts for 6 to 12 months, an economic recession and social turmoil will be inevitable. As The Atlantic magazine said, every step of the U.S. government has been wrong. A Wall Street Journal editorial put it succinctly: The U.S. has lost the current round to China. Of course, China is also suffering extensive difficulties, as there is no winner in trade war. But the heavy loser will undoubtedly be the United States.
As the world’s two largest economies, China and the United States share a common responsibility to help maintain a stable world economy and global trade. They also share tremendous economic interests, as both economies are highly complementary.
Unilateral tariffs and a trade war definitely move in the wrong direction. Trump and his team should cast aside all illusions that China will capitulate and that the U.S. can survive this tariff war. The only wise choice is to revoke all unilateral tariffs on China and the world, start sincere talks with China on the basis of equality, mutual respect and mutual benefit and return to the track of a healthy and sustainable bilateral trade relationship.
