China has warned that the US faces severe trade repercussions should Trump pursue tariffs on Chinese goods when he assumes the presidency.
In an editorial in the Global Times – generally considered close to the Chinese Government – the US is warned against naïve action on trade.
During the US presidential campaign Donald Trump promised to impose 45% tariffs on all Chinese goods, however it is so far unclear if this promise will be kept once he is in office.
Specifically, the editorial threatened that China could impose retaliatory sanctions and import bans if Trump follows through on this promise.
“China will take a tit-for-tat approach then,” the Global Times editorial proclaimed.
“A batch of Boeing orders will be replaced by Airbus. US auto and iPhone sales in China will suffer a setback, and US soybean and maize imports will be halted. China can also limit the number of Chinese students studying in the US.”
These comments show that China is prepared to fight back if the US initiates a so-called ‘trade war’ against it.
Manufacturing nightmare scenario
While both the Chinese and Trump publically claim to be more than ready to impose tariffs, the amount of economic damage these could cause make them very politically difficult to impose.
For major US high tech manufacturers such as Apple and automotive companies like GM, tariffs would be disastrous.
Moreover, consumers would see a steep rise in the price of many goods, as cheap Chinese imports would no longer be available.
In China, huge portions of the country’s manufacturing sector would become uncompetitive in their largest market, something which could crash China’s unstable economy.
Given this lose-lose scenario, it would seem unlikely at this stage that Trump would initiate such a trade war.
Indeed during a presidential debate, Trump provided himself with some political wiggle-room on the 45% tariff, characterizing it as a threat, which would only be carried out if China didn’t “behave”.