(Dr Pentapati Pullarao)
The tariff –trade war, started by President Trump, is a war where no guns or bombs are used. The Tariff war expected to be short. But like all wars, the tariff war is going into un-expected directions. Most countries responded as expected by Donald Trump. But China, which is world’s second biggest economy, has gone into attack mode against the USA. This was a totally un-expected consequence, where China is fighting back. This is a big shock for Trump
US President Donald Trump is a very smart man, who repeatedly said that he would never start wars. But now, Trump finds himself in the middle of a very big war, whose ending no one can predict. Just remember that Russia started the Ukraine war in February, 2022, thinking the war will be over in 15 days. The Ukraine war is still going on and Russia has not won. China may nto win this trade war. But China is also not losing it.
Trump and tariffs
Trump thought that tariffs would solve the economic decline of American manufacturing. About 50 years ago, USA was the top producer of steel, cars, ships, coal and oil. Now USA has very small production of such items. So, Trump thought that by high tariffs, steel, car, and other factories would return to USA.
- Donald Trump announced tariffs on all countries in the world. Most countries reacted positively and assured USA that they would satisfy Trump. India Prime Minister immediately met Donald Trump and assured that a deal would be worked out.
- Donald Trump paid particular attention to China, as it was the largest exporter to USA. Trump announced extra-tariffs in China, thinking China would be terrified. This is called the ‘Shock and Awe “theory in war “But China started announcing retaliatory tariffs and stung Trump very badly.
- Trump thought that China was also playing a game like he was and would request the USA to negotiate. But China surprised Trump and said that China will retaliate and not suffer insults and will fight to the end. This language shocked Trump, who is used to obedience from everyone.
- President Trump was shocked when China announced that it is restricting export of “rare minerals “to USA. China produces 90% of the “Rare Minerals “in the world, which are needed for laptops, weapons, space craft and just about everything. Without “rare minerals “, US economy would suffer.
- Un-expectedly for Trump, China and USA are now locked in a deadly fight. China is showing no signs of backing down. China and hints that USA should request negotiations.
Trump’s miscalculations with China:
- Trump under-estimated China and thought that like other countries, China would also request negotiations. But China refuses to ask for talks and has retaliated strongly against the USA. This was totally un-expected by Trump.
- Trump knows that if he asks for talks, then China will understand that he surrendered. China will demand too much from the USA and Trump will look like a failure before the rest of the world. The world will laugh at Trump if he surrenders.
- Trump’s officers have been requesting China that they should request talks with Trump. But China refuses as it senses that Trump is trapped now and will agree to anything China demands. Trump’s gamble now looks as if he will lose. Chinese social media is making fun of Trump as if he has lost.
China aggressiveness against USA :
- For weeks, China been preparing for Trump’s aggressive tariffs. China was ready for counter-measures, not surrender. President Xi of China opted for a hard response to trump.
- The Chinese Finance Ministry insulted the USA and Trump by officially calling the US Tariffs as the biggest joke in world economic history”
- China has contacted other countries and said they must coordinate their responses to USA, which is breaking down international systems.
- China also officially published in social media an old speech of China’s founder Mao Tse Tung in 1953, when China and the USA were actually near war. Mao said : No matter how long this war is going to last, we will never yield. We will fight until we completely win “.
However both China and USA realize that they must come to an agreement or both will lose. But as of now, China holds the upper hand. At anytime, Trump will seek talks with China, calling President Xi his best friend ! But Trump is looking for a face-saving way.
The situation right now is very tense in USA as prices are rising and the stock market falling c and billionaires are angry . Trump needs a deal with China immediately. But as great French Economist Proudhon said 200 years ago : The future is totally un-predictable “.
World enjoying fight between China and USA :
The entire world is enjoying the USA-China fight. Even in our own lives, we enjoy when the 2 richest people or the 2 biggest bullies fight in our town. We want to see both of them lose. Europe, Asia, Africa, South America, Russia, Ukraine – everyone is enjoying this fight.
(Author is a Political and Economic Analyst based in New Delhi)
