On the 15th local time, a "fact sheet" regarding Section 232 was released on the US White House website, mentioning that due to China's retaliatory measures, US tariffs on Chinese goods have been increased to 245%. On the 16th, at the regular press conference of the Foreign Ministry, a journalist asked the spokesperson for the Foreign Ministry about this issue. It seemed that Spokesperson Lin Jian was somewhat annoyed by this question and said that the origin of the 245% figure can be asked from the US side.

The "fact sheet" concerning Section 232 released by the White House. (Image source: White House website)

In previous articles, I mentioned that once tariff rates exceed 50%, most trade in goods would come to a halt. The essence of increasing tariffs by the US is psychological warfare and political warfare, showcasing a tough stance domestically while exerting certain pressure externally. From a purely economic perspective, even if the tariff is increased to 10,000%, it would be meaningless. Regarding the US imposing a 245% tariff on some of China's goods, China does not need to follow suit; following could appear petty and might allow the US to lead us around by the nose.

Over the past few days, the Trump administration has issued contradictory statements regarding tariff policies. On the evening of the 11th local time, the US Customs and Border Protection announced that the federal government had agreed to exempt smartphones, laptops, chips, and other electronic products from "reciprocal tariffs." However, on the 13th, Trump posted on social media stating that the US government did not grant any exemptions for certain categories of goods but rather moved them to other "tariff baskets." On the same day, Commerce Secretary Ross stated that the tariff exemptions for mobile phones, computers, memory chips, and other electronic products were only temporary. By the 14th, Treasury Secretary Mnuchin softened his tone when interviewed about the risk of decoupling between the economies of the US and China, saying there was no reason for the two countries' economies to separate and that there was a possibility of reaching a "major agreement."

From these contradictory pieces of information, we can see that although members of the Trump administration share consistent motives, attempting to exploit the position of the world's largest consumer market to extort the entire world, they are not coordinated on tariff policies internally. This results in their rhetoric changing daily, making it difficult for us to determine which statement is true when dealing with them. If we make great efforts to coordinate internally, prepare sincerely to make concessions, and negotiate, only to find out they've changed their stance, then we would be in an awkward situation.

At Qingdao Port of Shandong Ports, cargo ships loaded with foreign trade containers depart from the port. (Image source: Visual China)

I believe China should focus on its own affairs and remain calm amidst change. Tactically, we should fully assist export enterprises in exploring domestic markets or shifting to other markets. Currently, both the government and private sectors are taking action. At the governmental level, the Ministry of Commerce actively assists foreign trade enterprises in expanding domestic markets, and some banks provide financial support specifically for small exporting enterprises with funding difficulties. What is gratifying is that private enterprises are also responding positively. Liu Qiangdong's JD will purchase no less than 200 billion yuan worth of export-to-domestic-sales commodities within the next year to help foreign trade enterprises quickly expand their domestic market. This move is excellent, and we commend it. Through export-to-domestic-sales, part of the problem of product market outlets can be resolved. At the same time, many foreign trade enterprises are also striving to explore other markets, such as the Middle East, Eastern Europe, Southeast Asia, South Asia, Central Asia, etc., although the scale is not comparable to the US market, efforts from multiple fronts can make a difference.

Trump is now determined to fight a tariff war and it won't end hastily. The reasons I mentioned earlier include one, the heavy debt burden of the US; during Biden's term, the government spent a lot, nearly emptying the fiscal foundation. No wonder Trump hates Biden. Under such circumstances, Trump tries to increase revenue and cut expenditure. For revenue, he expects to collect tens of billions of dollars through customs duties; for expenditure, he relies on the "Department of Government Efficiency" to cut some expenses. Additionally, he hopes to promote the return of manufacturing to the US, strategically aiming to isolate and defeat China. Considering these motives, although Trump faces many obstacles domestically and internationally in fighting the tariff war, he will still persist and is likely to continue escalating it.

US President Trump. (Image source: AFP)

Currently, more than seventy countries have bowed under pressure, while only China stands firm against the US. Some pro-US factions domestically are very anxious, criticizing the Chinese government, claiming that all other countries have made concessions, so why does China alone remain standing. However, they overlook a key point: the main target of Trump's tariff war is China, and other countries may have room to maneuver by making concessions, whereas even if China makes concessions, it would be hard for the US side to stop.

The US may take various actions against China next. First, expanding the scope of taxation to more fields; second, expelling Chinese companies listed on US capital markets; third, taxing assets of certain countries, including China, in the US; directly confiscating assets is too radical, while taxation is relatively more feasible; fourth, further restricting US capital investment in China. Among these, points two and three will have a relatively greater impact on China. We must fully prepare for these possible measures by the Trump administration and actively respond to this complex and severe tariff war.

Original article: https://www.toutiao.com/article/7494191935876334118/

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