On the day China’s retaliatory tariffs on the US were due to take effect, the world has been blind sided by Donald Trump’s latest bombshell – a blanket 25% tariff on steel and aluminium exports to the US.
There are no exceptions. This is an across-the-board levy. Canada, Mexico, and Brazil will be hit hard as major steel exporting countries.
In Asia the news will rattle South Korea, Vietnam, Australia, and Japan who are significant steel exporters to the US.
Trump tariffs – US trade war latest
Australia has already said it will try to negotiate an exemption, and it won’t be alone.
Talking directly to the US and presenting a case that these tariffs are not in the US national interest is the only way to get Trump to back down.
Each country will have to find a way to stand up to the US and fight its corner.
Until now, the Trump tariffs have targeted specific countries, with 10% on China and an initial 25% for Canada and Mexico.
China has retaliated with 10-15% tariffs on crude oil, liquified natural gas, coal, farm machinery and pick-up trucks.
However, it’s also chosen other levers to pull, restricting access to 25 critical minerals and sanctioning several US companies.
President Trump and China’s President Xi Jinping are due to speak on the phone. Trump has said he’s in no rush to have the call. It’s not known when it will happen.
What could China offer Mr Trump in return? He may want their help to pressure Russia to end the war in Ukraine. It’s unclear whether President Xi would be prepared to do that.
While the West is bogged down and distracted by a war in Ukraine and a global trade war, China can focus on its national priorities without interference.
There is also another opportunity for China here. It wants to present itself as a stable and reliable trading partner to “Global South” countries.
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These are developing countries that have been hedging their foreign policy by having a strong relationship with both Washington and Beijing.
If Mr Trump’s predilection for protectionism and isolationism sees the US turn inward, who will be ready to step into the void?
China.