China is unlikely to engage with the United States as long as the latter continues its “tariff numbers game,” a sentiment echoed by China’s foreign ministry following the White House’s announcement of potential tariffs reaching up to 245% due to China’s retaliatory actions.
In a recent factsheet, the White House outlined a breakdown of China’s tariffs, which comprise a new reciprocal tariff of 125%, a 20% tariff aimed at tackling the fentanyl crisis, and tariffs varying from 7.5% to 100% on selected goods to counteract what it describes as unfair trade practices. The U.S. President, Donald Trump, had announced these additional tariffs two weeks ago, though he later reversed some higher “reciprocal tariffs” for a number of countries while maintaining the strict tariffs on China.
In response, China has implemented its own tariffs on U.S. goods and has refrained from pursuing discussions, stating that any talks must be grounded in mutual respect and equality.
Last week, China took a further step by lodging a complaint with the World Trade Organization (WTO), expressing “grave concern” regarding U.S. tariffs and accusing the U.S. of contravening the global trade body’s regulations. In the same week, China appointed a new trade negotiator, replacing trade representative Wang Shouwen with Li Chenggang, the country’s envoy to the WTO, which may impact future negotiations.
While President Trump has indicated a willingness to negotiate a trade deal with China, he has suggested that the first move must come from China. However, unease persistently looms over the tariff situation, even as discussions with Japan moved forward.
In a broader context, the uncertainty surrounding Trump’s tariff actions has intensified, particularly after the Federal Reserve’s chief, Jerome Powell, warned of rising prices and increased “volatility.” Despite reports of “progress” in negotiations with Japan lifting market spirits temporarily, the overall market remains jittery.
President Trump maintains that his tariffs will pave the way for advantageous trade agreements, reducing barriers for U.S. products and shifting the focus of global manufacturing back to American soil. Yet, as noted by Powell, tariffs could “highly likely” trigger a temporary spike in inflation and might lead to “more persistent” price increases.
Wall Street has not remained unscathed; at one point, the Nasdaq plummeted over 4%, while the S&P dropped more than 3% and the Dow Jones fell over 2%. Additionally, major chip manufacturer Nvidia saw a temporary decline of over 10%, citing significant expenses due to new U.S. export restrictions on semiconductor shipments to China.
World Bank President Ajay Banga further emphasized the climate of uncertainty, remarking that “uncertainty and volatility are undoubtedly contributing to a more cautious economic and business environment,” a sentiment underscored by WTO Director-General Ngozi Okonjo-Iweala’s assertion that such uncertainty “threatens to act as a brake on global growth, with severe negative consequences for the world, particularly for vulnerable economies.”
After meeting Japan’s trade envoy, President Trump touted “big progress” in negotiations. However, following discussions between Ryosei Akazawa, Japan’s envoy, and Treasury Secretary Scott Bessent, it became evident that while strides had been made, no immediate breakthroughs were achieved.
Prime Minister Shigeru Ishiba from Japan noted, “Of course, the discussions going forward won’t be easy, but President Trump has expressed his desire to prioritize negotiations with Japan.” He acknowledged the foundation laid in the talks but also highlighted the existing disparities between Japan and the U.S.
Japan, a critical ally of the United States in the Asia-Pacific and the largest investor in the U.S., faces the same 10% baseline tariffs imposed by Trump on many other nations, in addition to heavier tariffs on cars, steel, and aluminum.
Despite ongoing negotiations, Trump seems focused on convincing Japan to increase its purchases of U.S. defense equipment while modulating the yen’s strength against the dollar—topics that Akazawa indicated were not part of the recent discussions.
Meanwhile, discussions are also underway between Indonesian officials and U.S. representatives, with South Korea’s finance minister set to meet with Bessent next week. While the tariff war has garnered some support from Republicans, it poses political challenges for Trump at home. California Governor Gavin Newsom has recently initiated a legal challenge against Trump’s authority to impose tariffs unilaterally, which he claims have resulted in economic turmoil, increased prices, and hurt residents and businesses in the state.
As we navigate these complex trade dynamics, the intricate interplay of tariffs, negotiations, and global economic implications continues to unfold, leaving many stakeholders watching closely.
Edited By Ali Musa
Axadle Times International–Monitoring
