Trump’s New Tariff Threat
On Monday 10th of June, the U.S. President Donald Trump threatened to impose new tariffs on US$300 billion imports if, Chinese president Xi Jinping, does not agree to meet with him at the G20 summit. The summit was scheduled for June 28-29 in Osaka, Japan.
In a recent interview with the US president, Trump mentioned that he believes that he will hold bilateral talks with Xi Jinping in Osaka during the G20. It is widely believed that this meeting can form a new truce between the U.S. and China. But the U.S. president added that he will move forward with new tariffs immediately if Xi failed to show up. Geng Shuang, the spokesman of China’s Ministry of Foreign Affairs, responded that “We do not want a trade war, but we are not afraid of fighting one. If the U.S. is ready to have equal consultations, our door is wide open. But if it insists on escalating trade frictions, we will respond to it with resolution and perseverance.”
This just came after last Friday’s deal between the U.S. and Mexico. The U.S. reached a deal to avoid imposing new tariffs while Mexico pledged to take “strong measures” to contain migration. China and the U.S. have yet to reach an agreement on the trade war. Last month, the highly controversial two-day talks between the two countries ended without a deal and there has been little communication between Washington and Beijing on further negotiations. As early as May 10th, Trump imposed a 25% tariff on US$200 Chinese imports and took measures to impose an additional tariff on US$300 billion Chinese goods. Subsequently, Beijing retaliated with hiking a tariff increase on the revised list of US$60 billion U.S. goods and services.
Xi Jinping’s visit to Russia amid the tension of U.S.-China Trade war
Last week, Chinese leader Xi Jinping visited Russia amid the escalating U.S.-China trade war where both sides are threatening others with higher taxes. This is the eighth time that Mr. Xi visited Russia in six years. Xi was reported to gain a full harvest in Moscow. Xi Jinping and Vladimir Putin both broke the diplomatic practice and talked late into the night. In addition to the bilateral cooperation in the field of Sino-Russian energy and Huawei technology, Beijing and Moscow had many topics underway with international issues such as North Korea, Iran, and Venezuela. China’s Foreign Ministry spokesperson stressed that the international situation is full of uncertainty and instability. Under this background, strengthening the comprehensive strategic cooperation between China and Russia will inject more stability into the world and provide more “positive energy”.
During Xi’s visit, Russia’s top cell phone operator MTS signed a contract with Huawei to develop 5G technology. This was in response to Western countries blocking this world’s leading 5G technology giant. Ren Zhengfei, the founder of Huawei, indicated that in addition to China’s interest in Russia’s energy resources, the Sino-Russian relations have injected technological research and development investment into Russia.
At the session of the St. Petersburg International Economic Forum, Xi Jinping also expressed his willingness to maintain China-U.S. relations. He added that China and the U.S. alike, both have a stake in each other’s future. However, the hawkish advisers in Washington singled out Beijing and Moscow as “revisionist powers” and the biggest threat to the U.S. The analyst indicated that these increasingly hostile from Washington has pushed Beijing and Moscow closer.
A double-edged sword: the ban on Huawei
According to the Reuters, Russell Vought, chief deputy director of the Office of Management and Budget sent a letter to the U.S. Vice President Pence and 10 members of Congress, arguing that the restrictions on Huawei must be postponed. Dating back to last year, the Trump administration had banned ZTE and Huawei, both being Chinese tech giants. The U.S. also put Huawei on its blacklist of exports, banning it from purchasing U.S. technology. Consequently, Google, Intel, Qualcomm, and Broadcom joined and followed the order to ban Huawei. Russell Vought believes that these bans may lead to a sharp decline in the number of companies that can provide technical equipment to the U.S. government, mainly involving businesses in agricultural areas. Analysts considered that the trade war is a double-edged sword for Wall Street, multinational corporations and departments involved in the U.S.-China trade field.
By Steven Gao
Click here for a 7 days access to our Lotus Blue Portal.