China’s Commercial Trump Card against Trump

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BEIJING – US President Donald Trump has threatened to raise tariffs from 10% to 25% from May 10 on Chinese imports and is considering introducing additional tariffs worth $325 million. The step has put on a tightrope pm the new round of negotiations between the US and China.

Christopher Bovis holds a Ph.D. in Legal Sciences and is a professor at the business school at the University of Hull (United Kingdom).

“Tariffs will only be a measure of protectionism and the ability of the Chinese economy to absorb such increases has been well demonstrated in the past. However, if tariffs become a barrier to trade and not a balanced trade instrument, we will witness a new era of trade wars of unprecedented implications,” he warned.

Trade wars that are based on the increase of tariffs, he explains, whether or not they want to have a negative influence on the prices of goods and services. In the long run, protectionism, he says, is “an enemy to consumers” and “undermines the positive effects of globalization.”

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Bovis believes that tariffs are not a justifiable way to protect a country’s economy in modern international relations, so they are old tools.

“We are in an era of zero tariffs between trading blocs. The ability of states to rely on antiquated techniques of protecting domestic interest is incompatible with international standards,” he said.

Rates can influence the economy of a country in the short term and positively, but in the medium and long term the prospects are not very promising: nations isolate themselves and lose competitiveness. One thing is clear: “the consumer is the loser.”

Bovis adds that China’s financial influence is sufficient for the country to react to any tariff increase by the United States. “It has surpluses at its disposal which could be balancing any adverse effect from tariff increases for products destined to US markets,” he explained.

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