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TWN
Info Service on WTO and Trade Issues (Apr25/17)
Yerevan, 17 Apr (D. Ravi Kanth) — The United States on 16 April announced that it will impose a tariff of 245% on Chinese goods entering the American market, a move that suggests that Washington could wage the most coercive tariff and trade war against China and other countries for the first time in the last 100 years, analysts and reports suggested. Without seemingly deploying the proverbial “boots on the ground”, the Trump administration appears to be waging a war by isolating China in global trade while extorting major concessions for the controversial “global public goods” provided by Washington to the world, according to several reports in the US media, including a speech made by the Chairman of the Council of Economic Advisers, Stephen Miran, at the Washington DC- based Hudson Institute last week. In response to the Trump administration’s 245% tariff on Chinese goods, which is far beyond the kind of tariffs imposed by colonial powers in the 19th century, China on 16 April rebuffed Washington’s latest tariff hike and suggested that it is not scared and that it is ready to fight to the end. During a regular press briefing on 16 April, the spokesperson of China’s foreign ministry, Mr Lin Jian, reiterated China’s solemn position on the tariff issue, accusing Washington of having initiated the tariff war. He told reporters that Beijing has taken necessary countermeasures to safeguard its rights and interests and international fairness and justice, which is completely reasonable and legal. Mr Lin conveyed to Washington that tariff and trade wars have no winners, adding that China does not want to fight these wars but is not scared of them. Meanwhile, in a separate development, President Donald Trump suggested that he is going to hold discussions with Japan along with his secretaries of the treasury and commerce respectively, cautioning Tokyo that it must pay for the security being provided by Washington. Writing on his Truth Social media website on 16 April, President Trump claimed that “Japan is coming in today to negotiate Tariffs, the cost of military support, and “TRADE FAIRNESS.”” “I will attend the meeting, along with Treasury & Commerce Secretaries. Hopefully something can be worked out which is good (GREAT!) for Japan and the USA!”, he said. It may seem somewhat bizarre for the leader of the world’s largest economy to participate directly in a tariff discussion, though he seems to be suggesting that Japan needs to make a payment on the tariffs, the military support provided by US forces stationed in Okinawa since the Second World War, and on non-monetary barriers, said people familiar with the development. Aside from the unilateral reciprocal tariffs that are now being paused for 90 days, and the 10% baseline tariff imposed on all countries that came into effect on 5 April, the US administration appears to be pursuing a war-like approach against China by insisting that countries coming to Washington to negotiate on the reciprocal tariffs must not trade with China. In an exclusive report published in the Wall Street Journal (WSJ) on 16 April, it has been suggested that the Trump administration is likely to use the ongoing tariff negotiations with some 70 countries “to pressure US trading partners to limit their dealings with China.” Citing unnamed officials, the WSJ said, “the idea is to extract commitments from US trading partners to isolate China’s economy in exchange for reductions in trade and tariff barriers imposed by the White House.” It also suggested that the US officials will ask the large pool of negotiators congregating in Washington for bilateral talks “to disallow China to ship goods through their countries, prevent Chinese firms from locating in their territories to avoid US tariffs, and not absorb China’s cheap industrial goods into their economies.” Apparently, the US officials “have broached the idea in early talks with some countries,” the WSJ has suggested. According to the WSJ report, “Trump himself hinted at the strategy on Tuesday, telling the Spanish-language program “Fox Noticias” he would consider making countries choose between the US and China in response to a question about Panama deciding not to renew its role in the Belt and Road Initiative, China’s global infrastructure program for developing nations.” The key architect behind the US’ “isolate China” strategy is US Treasury Secretary Scott Bessent, the WSJ suggested, pointing out that “extracting concessions from US trading partners could prevent Beijing and its companies from avoiding US tariffs, export controls and other economic measures.” “The tactic is part of a strategy being pushed by Bessent to isolate the Chinese economy that has gained traction among Trump officials recently,” the WSJ pointed out, adding, “cutting China off from the US economy with tariffs and potentially even cutting Chinese stocks out of US exchanges.” PAY FOR US PUBLIC GOODS Meanwhile, in a rather startling speech delivered at the Hudson Institute in Washington DC last week, the Chairman of the Council of Economic Advisers, Mr Stephen Miran, sought a payment from countries in the multilateral trading system for certain “global public goods” provided by Washington throughout the last 80 years. According to a post on the International Economic Law and Policy blog on 13 April, Miran said that the US has provided several “global public goods” to the world at large. According to Miran, they include: (1) the provision of “a security umbrella which has created the greatest era of peace mankind has ever known”; and (2) “the US provides the dollar and Treasury securities, reserve assets which make possible the global trading and financial system which has supported the greatest era of prosperity mankind has ever known.” Miran argued that Washington incurred huge costs for providing these public goods. “On the defense side,” Miran suggested, “our (US) men and women in uniform take heroic risks to make our nation and the world safer, preserving our liberties generation after generation.” However, Washington has all along taxed its “hardworking Americans mightily to finance global security,” Miran suggested. Miran said that on the financial side, “the reserve function of the dollar has caused persistent currency distortions and contributed, along with other countries’ unfair barriers to trade, to unsustainable trade deficits.” “These trade deficits,” Miran argued, “have decimated our manufacturing sector and many working-class families and their communities, to facilitate non-Americans trading with each other.” Highlighting that “our financial dominance comes at a cost”, he suggested that the process of providing dollars has also kept currency markets distorted. “This process has placed undue burdens on our firms and workers, making their products and labor uncompetitive on the global stage, and forcing a decline of our manufacturing workforce by over a third since its peak and a reduction in our share of world manufacturing production of 40%,” he said. Therefore, going forward, he proposed “improved burden-sharing at the global level” from these public goods. “If other nations want to benefit from the US geopolitical and financial umbrella, then they need to pull their weight, and pay their fair share.” He asked countries to bear the “costs” for America to provide these public goods in order to “create global peace and prosperity and remain the reserve provider.” Miran called on other countries to accept the following demands of the Trump administration: * “First, other countries can accept tariffs on their exports to the United States without retaliation, providing revenue to the US Treasury to finance public goods provision. Critically, retaliation will exacerbate rather than improve the distribution of burdens and make it even more difficult for us to finance global public goods. * Second, they can stop unfair and harmful trading practices by opening their markets and buying more from America; * Third, they can boost defense spending and procurement from the US, buying more US-made goods, and taking strain off our service members and creating jobs here; * Fourth, they can invest in and install factories in America. They won’t face tariffs if they make their stuff in this country; * Fifth, they could simply write checks to Treasury that help us finance global public goods.” In a nutshell, the US demands seem like outright extortion as countries had to bear the consequences of unnecessary wars like the Vietnam War, the US war in Afghanistan, the Iraq War, the dismantling of Libya and several other conflicts involving the US that reportedly killed millions of innocent people, said people familiar with the development. Even though it secured substantial benefits and gains from the international trade and financial architecture that it had created in the past 80 years, the US, with a per capita income of more than $50,000, wants the poorest countries like Lesotho, Cambodia, and Laos among others to pay for the so-called “golden era” that the Trump administration seeks to create, said people familiar with the development.
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