First shots in the trade war: What is Beijing ahead?

First shots in the trade war: What is Beijing ahead?

The first blow in a new trade conflict between China and the United States was fired on Monday when Beijings Zölle came into force to almost $ 14 billion in American imports. These tariffs, which affect crude oil, liquefied natural gas as well as certain machines and vehicles, were introduced less than a week after the introduction of flat-rate 10%tariffs by US President Donald Trump to hundreds of billions of dollars that the United States imported from China every year.

hopes for negotiations

There was hopes that a phone call between Trump and Chinese President Xi Jinping could have prevented an escalation of hostility in the past week that could lead to a more comprehensive trade war. But this conversation never came about. Now the question is what will happen next and how far the two largest economies in the world are willing to burden their tightly intertwined trade relationships.

potential for an agreement

So far, both sides seem to be scope for a possible agreement despite the first shot. "In his response to the new Trump-Zölle, Beijing has practiced reluctance. This is due to the moderate effects on China and because XI wants to leave space for negotiations with Trump," said Andy Rothman, managing director of the Sinology.

The influence of tariffs

The Chinese tariffs contain a 15%tax on certain types of coal and liquefied natural gas as well as a 10%customs in customs on crude oil, agricultural machines and some vehicles. According to a calculation of CNN, these tariffs are based on China's Zollageld for 2024 and concern were worth around $ 13.86 billion, which makes up less than 9% of the total import goods from the USA. Last year China had exports worth over $ 524 billion to the USA and imports of over $ 163 billion, according to customs numbers.

The reaction of the USA

The current tariffs from Trump are rather mild compared to the over 60%he had threatened in his election campaign. They are added to existing tariffs to hundreds of billions of dollars in imports from China. In the election campaign, the US President concentrated to compensate for the economic competitive environment with China and explained that he was open to an agreement. Last month he said political and economic elites in Davos that he had always "liked" Xi and was looking forward to better cooperation with China.

preparations for the future

"Trump seems to be in the mode for negotiations and uses Zölle as a negotiating means. However, it is unclear what Trump wants from XI and what he is ready to offer in return," remarked Rothman. Observers of Chinese elite policy say that XI and his officials are probably relieved by the rather gentle key of the Trump administration and the previously limited measures. "They had prepared for 60%tariffs and a complete decoupling. Nothing has happened, which is closer to the worst scenario," said Suisheng Zhao, director of the Center for China-US Cooperation at the University of Denver.

future challenges

Another important date is about: April 1st to which Trump has commissioned his civil servants to carry out an investigation into the economic relationships between the USA and China, which could possibly lead to further measures. The officers in Beijing will now focus on carefully controlling the messages they send to the Trump administration in their diplomacy and trade measures in order to avoid a clearer trade war.

strategies for conflict coping

It is likely that Beijing endeavors to take advantage of the opportunities that arise from the personal relationship between Trump and XI in order to prevent the US president from tightening the punishments against the Chinese economy-which, according to economists and analysts, would also cause serious damage. That could mean that Beijing is open to the American president at personal meetings in Beijing, something that the sources of CNN announced last month and what Trump should be interested.

considerations of punishments and concessions

Although Beijing could concentrate on avoiding an escalation of the trade war, there is no doubt that the Chinese officials carefully prepare emergency plans and weigh up possible punishments and concessions if Trump continues to escalate. "Trump's trade measures will force Beijing to a reaction, but with a more targeted approach than the comprehensive retaliation measures that we saw from 2018 to 2019 when the trade war broke out," said Nick Marro, chief economist for Asia at the Economist Intelligence Unit (EIU)

FAZIT

summarized it is shown that China is better prepared for trade conflicts compared to the first term of office of Trump. Chinese companies have started to diversify their export goals while Beijing is working on a campaign to strengthen or repair its relationships with other trading partners. This is an opportunity that opens up for Beijing when Trump produces tensions with US allies and partners.

A crucial point, however, will be the substantial concessions of China during possible negotiations with the United States. Analysts indicate that Beijing has not fully implemented the phase-one trade agreement achieved last year, while the US concerns continue to extend into China's industrial policy and economic model.