From trade war to third world war? From Korea to the South China Sea, Trump’s tariffs risk escalation


Donald Kirk says US trade deficits make Trump’s aggressive strategy understandable, but China’s reliance on the US market has played a major role in keeping disputes – particularly over territorial waters – under control. As Trump hinders access, that could change

How Trump could turn global asset bubble into weapon of mass destruction

The global trade war is sweeping the world, and US President Donald Trump intends to keep fighting. The question, though, is how and when it will end and what damage it will leave in its wake.

The US contends that, eventually, some of the United States’ trading partners will realise they need to slash their barriers to imports and also make life easier for American companies doing business on their soil.

Everyone else, however, blames Trump for upsetting global trading patterns and bringing on what could be a new era of restrictions and restraints on free trade. Go one step beyond that, and countries are going to begin blockading shipping and closing borders entirely. Finally, there is the danger of war as the only recourse that some leaders will decide is needed to set matters straight again.

In this great power struggle, it is extremely difficult to sort out right and wrong. Countries and companies make claims and counterclaims as in a courtroom drama in which one aggrieved party is suing another. The Americans see just about every major trading partner as unfairly dumping goods on American markets at extremely low or zero tariffs while imposing high tariffs on imports from the US.

Trump staring down barrel of yuan devaluation in trade war

The worst offender, as far as the US is concerned, is China, whose exports to the US exceed its imports by about US$400 billion. That’s such an extraordinary trade imbalance that it’s difficult to believe it reached such heights without provoking an outcry much earlier.

In fact, American negotiators have been complaining for years that the value of the Chinese yuan is set far too low so Chinese products can be exported cheaply. They also say China sets up barriers to imports that make it difficult for American products to get into China or to compete effectively once they get there.

That’s why Trump has imposed a 25 per cent tariff on US$34 billion of imports from China, and the Chinese have fired back imposing tariffs on two huge US exports, soybeans and motor vehicles.