Trump tells China: ‘You’re tariffed!’
As the United States midterm elections approach, Donald Trump has calculated that ramping up his trade war with China is just good politics, with the fallout on American businesses, farmers and consumers coming later.
It’s also an excellent distraction from the welter of books hitting the bestseller lists with revelations about the awfulness of Trump – including excruciating detail of sex with the man in porn star Stormy Daniels’ memoir and the allegation by former White House staffer Omarosa Manigault Newman he wanted to swear his oath of office on a copy of The Art of the Deal. Not to mention Trump’s buddy Paul Manafort rolling over to the Mueller investigation, and Trump’s nominee for the Supreme Court, Brett Kavanaugh, getting accused of a sexual assault while at high school.
This week his administration issued a list of some 5700 import items from China that will be hit with a 10 per cent tariff from Monday, rising to 25 per cent from January 1. This covers $US200 billion worth of imports, in addition to the $US50 billion worth of imports hit with punitive tariffs in July. “Further, if China takes retaliatory action against our farmers or other industries, we will immediately pursue ... tariffs on approximately $267 billion of additional imports,” Trump said, adding: “If countries will not make fair deals with us, they will be ‘Tariffed!’ ”
Not willing to lose face, Beijing announced it was doing just that, as it had to the July round. It said it would apply tariffs to a further $US60 billion of its annual imports from the US – effectively all of its imports in the bilateral trade. The additional $US267 billion mentioned by Trump would then bring all of China’s exports to the US under the new tariffs.
The phase-in means Trump can approach the November 6 midterms waving his big trade stick at China, while the resulting price rises for Americans will not be felt much until next year. Lobbying also led to about 300 popular items being excluded from this current list, including T-shirts and some Apple gadgets.
But inflation is low, and many Democrats won’t disagree with the approach. It’s also got Chinese leaders flummoxed. Some of their trade experts feel they are walking into a trap by retaliating. Reports about pain in the coastal factory belt and the piggeries reliant on US soybeans are being suppressed. The renminbi has been allowed to depreciate a bit to compensate exporters, but this can’t be taken too far without triggering capital flight and inflation.
Canberra is expressing alarm at the approach, and business leaders are worrying that Trump might take the Chinese economy down and ours with it. But realisation is growing that this may not be a short-term disruption resulting from a freak election win by an unqualified candidate.
As Jack Ma, the founder of Chinese ecommerce giant Alibaba, put it to investors this week, we should resign ourselves to a drawn-out contest. The US–China trade war would last not for 20 months or 20 days, but “maybe 20 years”, he said. Perhaps not coincidentally, Ma had just announced his retirement from a direct role in Alibaba, to concentrate on philanthropy.
A former CIA counterintelligence analyst, Peter Mattis, has been touring the Antipodes in recent months with a message about a paradigm shift in Washington, expressed in the Trump administration’s National Security Strategy last December. It judged the policies of engaging China – pursued by seven previous presidents since Richard Nixon met Mao Zedong in 1972 – to have failed, since China was not converging with the West in its systems and values.
Mattis says a new breed of China expert is needed. “Too much of the existing talent has been conditioned by the long-held engagement policy,” he wrote recently in the Texas National Security Review. “Engagement and competition require fundamentally different mindsets and thinking through a different set of questions. Engagement as a policy direction presupposes that interaction is fundamentally good and that opening China to academic, business and civil-society ventures is beneficial to US interests. Competition, by contrast, raises first-order questions, such as whether there are long-term benefits to US businesses operating in China or whether Beijing’s policies are incompatible with US long-term interests.”
Indeed, as Henry Kissinger, the architect of Nixon’s move towards China, put it to the Financial Times in July: “I think Trump may be one of those figures in history who appears from time to time to mark the end of an era and to force it to give up its old pretences.” Henry K concluded that the world was in a “very, very grave period”.
Amid the dismal performance of courts elsewhere in South-East Asia – jailing filmmaker James Ricketson as a spy for flying a drone, two Reuters reporters in Myanmar over “secret” documents planted on them by police, an Indonesian woman who complained about the amplification level of calls to prayer by a mosque − some judges in the Philippines have shown some spine.
They gave life imprisonment sentences to a former army general, Jovito Palparan, a colonel and a staff sergeant over the abduction and “disappearance” of two female student activists during counterinsurgency operations against the communist New People’s Army in 2006. Witnesses said they saw Karen Empeño and Sherlyn Cadapan tortured and raped while in Palparan’s custody at a camp in Bulacan province. They have not been seen since.
Palparan is thought to be the most senior military officer to be convicted in a human rights case. “The verdict is an important step for justice in the Philippines where serious abuses by the military and police are rarely punished,” said Carlos Conde, the Human Rights Watch researcher in Manila.
Reports from Canberra suggest the new foreign minister, Marise Payne, has had an early success shooting down a silly idea pushed by the Nationals during the recent leadership turmoil: a new agriculture visa to let in tens of thousands of Indonesians and Filipinos for harvesting work.
As the Australian National University economist Stephen Howes pointed out, this would risk the strategically important Seasonal Worker Programme for workers from the Pacific Islands and Timor-Leste, now getting into its stride with about 8000 islanders coming here to work each year, remitting earnings back to family and taking home seed capital for small enterprises. A second scheme for non-farm work started in July. By contrast, the Nationals’ proposal would be a drop in the ocean for the big South-East Asian countries. Payne says Australian policy is that “Pacific countries would always take precedence”.
As Scott Morrison announced a royal commission into aged care this week, news came from China about one approach to ensuring the elderly are properly looked after.
Ten days ago, a court in Pingwu County in Sichuan province found that Zhang Shun’an had died of neglect last year aged 80, and convicted his son and four daughters of failing to meet their filial duties, sentencing the son to prison for two years with the daughters receiving suspended sentences. Under Chinese law, failure to nurse elderly parents or young children is a criminal offence, with punishments up to five years’ jail.
With young couples having to tend to multiple sets of parents and grandparents, thanks to the one-child policy, it seems authorities are having to crack the whip a bit, to avoid the 255 million over-60s expected by 2020 becoming an unsupportable burden on the state.
This article was first published in the print edition of The Saturday Paper on Sep 22, 2018 as "Trump tells China: ‘You’re tariffed!’". Subscribe here.