GZERO Media logo

US-China Trade: Trump puts a Knife to Beijing's Throat

US-China Trade: Trump puts a Knife to Beijing's Throat

China has long insisted that it won't negotiate a new trade pact with the US with "a knife at its throat." Over the weekend, US President Donald Trump flipped open the switchblade.

In a series of tweets, he blasted Beijing for taking advantage of the US economy, and threatened to sharply increase tariffs on everything China exports to the United States.

Coming just days before China's top negotiator was expected in Washington for a crucial – and perhaps final – round of trade talks, the tweets threw global financial markets into turmoil for several hours as investors worried that the world's two largest economies might fail to reach a deal for the foreseeable future.


What's the background?

For months, the US and China have been negotiating a trade agreement. Washington wants Beijing to make it easier for American firms to do business in China, cut back on government support for Chinese tech firms, stop stealing US technology, and buy more American agricultural goods.

Beijing sees these demands as part of an American attempt to stop China's rise as a global power. So while China has been willing to make life easier for US firms, it's less enthusiastic about cutting subsidies for Chinese companies or boosting purchases of US goods.

As a negotiating tactic, the Trump administration earlier this year slapped a 10 percent tariff on $200 billion worth of Chinese goods, and it has threatened to raise that to 25 percent if China doesn't meet US demands. Trump, unhappy with the pace of progress in negotiations, now says that will happen on Friday.

What's more, he's poised to put a 25 percent tariff on the remaining $325 billion of Chinese exports to the US, and "soon." That would mean higher prices for US consumers on virtually all Chinese goods bought in the United States – furniture, clothes, cars, electronics, you name it.

Why is this happening?

It's probably a combination of these three factors.

It's Trump's style: Making extreme demands and then stepping magnanimously back toward compromise is a long-established Trump negotiating tactic, particularly on trade. With a critical round of negotiations coming up, Trump now wants maximum leverage.

It's Trump's advisers: Hardliners on China within the Trump administration – in particular chief trade negotiator Robert Lighthizer – may have Trump's ear now. Some reports say Trump's tweet storm followed Lighthizer's complaints that China is reluctant to codify the terms of any new US-China deal into law. This – along with the question of how to ensure China actually complies with any new agreements – has long been a sticking point in talks.

It's the economy: Recent data say the US economy is rocking – "killing it" even. This gives the president more room to turn the screws on the US' largest trading partner without worrying about adverse effects, at least in the short term.

What happens next?

Neither side wants to lose face. Barring a massive concession from Beijing – or a dramatically gracious climbdown by Trump out of deference to his "good friend" Xi Jinping – Friday will mark a significant escalation in the trade war between the world's two largest economies, one that could last into the 2020 US presidential election and beyond.

Wales, early 19th century: During breaks from his law studies, William Robert Grove indulges in his passion for science to become an inventor. On his honeymoon in Europe, he learns about the new energy source everyone's talking about: electricity. After learning that electricity allows water to be broken down into its two components, hydrogen and oxygen, his intuition leads him to an idea that ends up making him a pioneer of sustainable energy production.

Watch the story of William Robert Grove in Eni's MINDS series, where we travel through time seeking scientists.

Ian Bremmer's Quick Take:

Hi, everybody. Ian Bremmer here, and as we head into the weekend, a Quick Take on, well, the first bombing campaign of the new Biden administration. You kind of knew it was going to happen. Against some Iranian-backed militias in Syria, looks like a couple of dozen, perhaps more killed, and some militia-connected military facilities destroyed. I think there are a few ways to look at this, maybe three different lenses.

More Show less

Listen: The country's top infectious disease expert, Dr. Anthony Fauci, joins Ian Bremmer to talk vaccines, school re-openings, and when—and how—the pandemic could finally come end. He was last on GZERO World just weeks before the pandemic hit in the fall of 2019 and he described at the time what kept him up at night: a "pandemic-like respiratory illness." This time, he talks about how closely that nightmare scenario foreshadowed the COVID-19 pandemic. He also offers some guidance about what public health measures vaccinated Americans should continue to take in the coming months (hint: masks stay on).

Subscribe to the GZERO World Podcast on Apple Podcasts, Spotify, Stitcher, or your preferred podcast platform to receive new episodes as soon as they're published.

Afghanistan frustrated nineteenth-century British imperialists for 40 years, and ejected the Soviet army in 1989 after a bloody decade there. And though American and NATO forces ousted the Taliban government in 2001 over its support for al-Qaeda, there's no good reason for confidence that nearly 20 years of occupation have brought lasting results for security and development across the country.

But… could China succeed where other outsiders have failed – and without a costly and risky military presence? Is the promise of lucrative trade and investment enough to ensure a power-sharing deal among Afghanistan's warring factions?

More Show less

Carl Bildt, former Prime Minister and Foreign Minister of Sweden, shares his perspective from Stockholm on Europe In 60 Seconds:

Is there a military coup ongoing in Armenia?

Well, it isn't a military coup as of yet, but it's not far from it either. This is the turmoil that is resulting from the war with Azerbaijan, which Armenia took a large death loss. What happened was that the head of the armed forces asked for the prime minister to resign. That was not quite a coup, but not very far from it. Now, the prime minister sacked the head of the armed forces, there's considerable uncertainty. Watch the space.

More Show less
The GZERO World Podcast with Ian Bremmer. Listen now.

GZEROMEDIA

Subscribe to GZERO Media's newsletter: Signal

Biden strikes Syria. Now what?

Quick Take