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China-US Trade: How China Counter-Attack US Tariff Hike

May 13, 2019 | Monday

Economy

   

On Monday, experts say Beijing does have an option to counter-attack the tariff increase implemented by the United States President Donald Trump last week.

The recent update regarding U.S.-China trade talks was on Friday which ended without any trade deal. The negotiations went down with Trump's last threat to increase the tariff rates to 25 percent on Chinese goods worth more than $200 billion.

Right after the new rates executed by President Trump, China's Commerce Ministry said it would plan for countermeasures to go against the Americans tariff increase. China's Commerce Ministry didn't reveal any clue of their response will be but said its "deeply regrets" regarding the turn of events. Experts reckon Beijing's counter may end up with mixed options to hurt the United States.

According to Susan Shirk, former deputy assistant secretary of state (Clinton Administration), China will counter-attack. The country will make it a "commensurate" way, and may "include" more than just about imports. Shirk added that China might target the U.S. "farm exports to China," mainly because it was what "President Trump's cares about politically."

Shirk also added her expectation of additional pressure to American firms that are operating within China. That may include slowdown approvals for banks and stricker checks on imports. "I would be extremely surprised if there were no retaliation," Shrink said

Shirk is now the 21st Century China Center chair at the University of California San Diego School of Global Policy and Strategy.

Analysts said Beijing could also include currency depreciation. To drop the amount for yuan making Chinese exports advance and possibly offset the impact of U.S. tariffs.

According to Bo Zhuang, China chief economist at research firm TS Lombard, the currency could be the area wherein Beijing has a clear advantage over Washington.

Zhuang said China's flinching account balance and tariff re-escalation are to make an "opening for the (People's Bank of China) to accept further market-driven depreciation" on yuan within 2019's second half.

   

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