Market volatility as US-China trade war takes new twist
Fiery rhetoric from China mitigated by optimistic remarks from Donald Trump on Twitter
The US-China trade war continued its chaotic trajectory on Tuesday, with fiery rhetoric from China - following $60 billion of new tariffs announced the day before - somewhat mitigated by optimistic remarks from President Trump to the press and on Twitter.
Trump tweeted in the morning: “When the time is right we will make a deal with China. My respect and friendship with President Xi is unlimited but, as I have told him many times before, this must be a great deal for the United States or it just doesn’t make any sense. [...] It will all happen, and much faster than people think!”
Wall Street had suffered its worst day since January on Monday, but on Tuesday, according to the Guardian, “hopes that the US and China haven’t irretrievably fallen out helped shares to rally - Donald Trump’s tweets can take some of the credit.”
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
At the end of last week, talks aimed at ending the conflict broke down, with the US on Friday increasing duties on $200 billion worth of Chinese imports to 25%. On Monday, China responded with tariff hikes of its own - up to 25% on $60 billion worth of imports, set to come into effect on 1 June.
In what amounts to the first explanation from either side for why the talks broke down, The Financial Times reports that yesterday the Chinese foreign ministry accused the US administration of “trying to force Beijing to suddenly increase the volume of goods it was willing to buy from the US as part of an agreement, violating terms struck in December.”
“The US 'arbitrarily raised its asking price', said a spokesman for the foreign ministry. 'The hat that... violates promises is absolutely not on the Chinese head.'”
It remains to be seen if Trump’s optimism about a resolution to the conflict will be borne out. Writing in the New York Times, Neil Irwin argues that “United States and China seem to be digging into their positions in ways that will be hard to resolve with the mutual face-saving that typically turns high-stakes negotiations into deals. [...] It is not clear what the off-ramps might be that would allow a de-escalation and prevent a major trade war that would prove costly to both nations.”
With a statement that could suggest a more protracted conflict, Hu Xijin, the editor of nationalist tabloid the Global Times, wrote on social network Weibo: “Washington was betting on overwhelming China with a single blow; it didn’t realise that the China-US trade war could become a war of attrition.”
But CNN says that the trade war is unsustainable, and predicts that it won’t last: “China's booming middle class is a critical growth engine for Boeing, Apple, Nike and other American brands. China is expected to keep growing in importance as a buyer. And America's insatiable appetite for cheap goods has created a Chinese factory juggernaut that employs millions of workers.”
Despite economists’ unanimous consensus that tariff wars are ineffective and result in costs shouldered almost entirely by the aggressor’s businesses and consumers, there remains unusual bipartisan support for Trump’s tough stance on China’s trade practices.
As Sky News says: “There is no doubt that, in this particular instance, Mr Trump has the moral high ground... Successive US presidents and countless American businesses have been frustrated by the way Beijing enforces regulations that bestow advantages to Chinese companies while penalising foreign ones.”
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
William Gritten is a London-born, New York-based strategist and writer focusing on politics and international affairs.
-
The history of Donald Trump's election conspiracy theories
The Explainer How the 2024 Republican nominee has consistently stoked baseless fears of a stolen election
By David Faris Published
-
Two ancient cities have been discovered along the Silk Road
Under the radar The discovery changed what was known about the old trade route
By Devika Rao, The Week US Published
-
'People shouldn't have to share the road with impaired drivers'
Instant Opinion Opinion, comment and editorials of the day
By Justin Klawans, The Week US Published
-
Donald Trump's bitcoin obsession
The Explainer Former president's crypto conversion a 'classic Trumpian transactional relationship', partly driven by ego-boosting NFTs
By The Week UK Published
-
Would Trump's tariff proposals lift the US economy or break it?
Talking Points Economists say fees would raise prices for American families
By Joel Mathis, The Week US Published
-
Why can't China turn its economy around?
Today's Big Question The post-pandemic crisis puts pressure on Communist Party leaders
By Joel Mathis, The Week US Published
-
Epoch Times CFO charged with money laundering
Speed Read Weidong "Bill" Guan stands accused of laundering $67 million
By Peter Weber, The Week US Published
-
Is Marjorie Taylor Greene finished?
Talking Points Marjorie Taylor Greene's effort to oust House Speaker Mike Johnson failed, but it still left many of her fellow Republicans furious
By Harold Maass, The Week US Published
-
Will college Gaza protests tip the US election?
Talking Points Gaza protests on U.S. campuses pose problems for Biden like the ones that hurt Lyndon B. Johnson in the '60s
By Harold Maass, The Week US Published
-
Can Trump get a fair trial?
Talking Points Donald Trump says he can't get a fair trial in heavily Democratic Manhattan as his hush money case starts
By Harold Maass, The Week US Published
-
What RFK Jr.'s running mate pick says about his candidacy
Talking Points Robert F. Kennedy Jr.'s' running mate brings money and pro-abortion-rights cred to his longshot presidential bid
By Harold Maass, The Week US Published