HONG KONG – Amid escalating global tensions following US President Donald Trump’s latest announcement of new tariffs on US$200 billion worth of Chinese products, China could respond by further developing relations with the European Union, say Christian Ewert, a trade expert based in Europe.
Trump announced on Monday that the US would apply a fresh round of 10 percent tariffs on Chinese imports – starting from next Monday. The tariff rate will rise to 25 percent from the beginning of next year.
You cannot negotiate by holding a gun to the other side’s head, but it is literally what Trump is trying to do.
Christian Ewert, President, amfori
If China takes action to retaliate against farmers or other industries in the US (as it has said it would) the US will “immediately pursue phase three”. This is further tariffs on about US$267 billion of additional imports, Trump warned in a statement.
China’s Ministry of Commerce responded on Tuesday that China would take counter measures to protect its legitimate rights and the stability of global free trade. It said the tariffs brought new uncertainties to planning talks between the two economies.
Last week, Chinese officials including Vice-Premier Liu He were invited by the US Treasury Department for talks with Treasury Secretary Steven Mnuchin later this month in Washington.
These negotiations are likely to be canceled after the announcement, according to news reports.
“You cannot negotiate by holding a gun to the other side’s head, but it is literally what Trump is trying to do,” Ewert said.
Ewert is president of amfori – formerly the Foreign Trade Association – a Belgium-based business association for open and sustainable trade.
Hopefully, the negotiations could take place as planned and even make some progress, he added.
Ewert advised China to look to other markets. He said this could actually be a unique opportunity for more trade between China and the EU - as trade events between them had been growing.
“If one of three main players doesn't play along any more, the other two can take advantage of the situation and generate maximum benefits from it together,” Ewert ventured.
According to data from Eurostat, the EU’s statistics office, China became the region’s biggest supplier last year, accounting for 20 percent of extra-EU imports. Apart from that, it is the second-largest trading partner for EU exports, following the US.
Manufactured goods such as machinery and vehicles dominated overall trade, comprising 85 percent of EU exports and 97 percent of imports from China in 2017.
Ewert also sees more cooperation between China and the EU developing in consumer products, high-end technology and financial investment.
Amfori has proposed a free-trade agreement between China and the EU, which covers goods, services and investment. It predicts that if such an agreement is concluded by 2030, GDP in both places will benefit considerably. This could potentially lead to an increase of 1.87 percent for China and 0.76 percent for the EU.
Amfori also believes the time is ripe to take a bold step now in an era of increasing protectionism.
For the association’s existing 2,400 company members, the impact of Sino-US trade disputes was limited, said Ewert. But when it came to recent tariffs affecting consumer products -- ranging from luggage to seafood -- there was a definite impact.
The US targeted the EU in May by imposing additional 25 percent tariffs on steel imports and a 10 percent levy on aluminum imports. In July, the two sides struck a deal to pause plans to impose new tariffs and work toward zero tariffs.
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