Yankee whiskey is too strong for the Chinese
Jack Daniels will become a luxury product in China from this week on, after that country decided to increase tariffs to a list of imported American products for a total value of 34 million dollars. Soybeans and electric vehicles stand out among the goods to be charged by the Asian government that responded forcefully to the new tariffs implemented by US President Donald Trump. The Asian giant has avoided by all means and possible ways the economic collision between the two nations, but has not remained idle in front of Washington’s new escalation in the trade war that both are leading.
From July 6 Beijing announced they will impose a 25% tariff to 545 US products that includes orange juice, lobsters, salmon and cigars. Clearly, Xi Jinping is smartly dealing the blow to North American agriculture that although it is not the main item of American income, it does affect a group of voters supporters of Donald Trump. With that purpose the Asians seek to generate dissatisfaction among the followers of the US president that could make negative repercussions for the Republican Party in the upcoming legislative elections.
On the other hand, China's strategy aims to replace these North American products with imports from other suppliers such as Brazil or Australia. It is also speculated that the Asian giant will impose levies on 114 additional products, including medical equipment and energy products, said the Ministry of Finance. In spite of the conversations and negotiations with China, Trump plans to carry out his strategy of restraining the Asian giant in what he considers commercial practices. The curious thing is that Donald Trump does not realize of the protectionist practices that his administration executed and that currently weighs on the world's leading economies.
Several economists thought the North American actions would remain words since they could have complicated the dialogue with North Korea; nevertheless, the United States maintained the sanctions and the summit between North Korea and the United States got quiet.
The Chinese government has repeatedly stated it does not want a commercial economic confrontation with the main world power, but has reiterated through its Ministry of Commerce that it will strongly respond back to continue the United States with the punitive measures to its products.
The Asian Foreign Ministry a few months ago described as arrogant and ignorant Trump’s officials and advisers who believe that through pressure can stop the Asian boom. Hua Chunying at the time clarified the Chinese position: they will not accept economic intimidation and US hegemony.
On the contrary, Beijing has canceled the agreements signed with Washington through which it promised to reduce the trade surplus with the United States.
The agreements stipulated to buy more US agricultural goods, natural gas and other products to reduce the trade deficit of more than 200,000 million US dollars by the end of 2020, as well as to strengthen cooperation to protect intellectual property.
Although the White House is aware of the importance of the Chinese market as a commercial guarantee and a presence in the Asian market, the relations between both nations are getting tenser. Since the arrival of Donald Trump to the White House, he has established a group of trade measures with protectionist purposes and intended to guarantee the presence of North American products and companies. Tariffs on steel and aluminum triggered the trade confrontation, whose shock waves have touched closely the economies of the American allies.
Donald Trump’s American First has raised the banners of violation of free trade and damaged American economy and its allies. Another argument used by Washington is the stealing of intellectual property in the technological field and technology transfer, which Trump promised to stop.
A White House’s official on April said China does not pursues a fair trade; hence Trump's decision to defend from aggression. Erroneously the American high-level official commented that the measures were a benefit to the world-wide commerce; an idea clearly denied and fought by Germany, France and Canada that at the recently concluded G7 Summit showed their discontent.
China is counterattacking against the Americans who keeps on provoking again and again. The most recent aggression was the announcement of tariffs of 25% on several goods imported from China valued at 50,000 million dollars. Ironically, it is the United States itself that sometimes uses China to crest pressure against nations such as North Korea and Iran.
Win the meanwhile, Wall Street still is a madhouse with the sudden rise and fall of prices, since each new aggression on both sides is reflected on the values of the main trade rates.