Peter Navarro, White House trade adviser, has a message for the American people a la Margot Channing from All About Eve: “Fasten your seatbelts. It’s going to be a bumpy night.” Navarro warned that the trade spat with China will be a long battle, one that will only conclude if the world’s second-largest economy “revamps its entire economic model” and abandon so-called unfair policies.
In other words, you can expect more casualties in this trade war until the global economy falls. Navarro’s position in the White House might as well be renamed anti-trade adviser.
Perhaps some people really do want to watch the world burn.
US Might Double Tariff Rates
Rather than attempting to alleviate the damage done by tariffs, the U.S. government is doubling down on its tariffs. Bloomberg is reporting that President Trump’s inner circle on trade is encouraging him to adopt a plan that more than doubles tariff rates on $200 billion in Chinese goods, which they think would force the country to make trade concessions.
This is the same trade team that did not anticipate China’s tit-for-tat retaliatory response. Yet, they now believe that China will finally make concessions because tariffs are going higher. Interesting.
Officials close to the situation tell the business news network that Trump’s advisers are recommending tariffs as high as 25%, up from the original proposal of 10%. Washington recently slapped 25% levies on $50 billion worth of Chinese products, but this new idea would impact a larger number of goods, targeting consumer goods, chemicals, and food.
Some members of the Trump administration also believe a hefty penalty is required to compensate for the immense depreciation of the yuan, which has tumbled to a 13-month low. Although Treasury Secretary Steven Mnuchin has only mentioned that Washington and G7 partners will monitor the situation with the Chinese currency closely, the general consensus is that the yuan has plummeted because of the trade dispute, a sluggish economy, and ultraloose fiscal policy.
U.S. Trade Representative Robert Lighthizer has made it clear that Washington wants Beijing to address unfair trade practices that the country has maintained for years:
“For over a year, the Trump Administration has patiently urged China to stop its unfair practices, open its market, and engage in true market competition. Rather than address our legitimate concerns, China has begun to retaliate against U.S. products.”
Navarro echoed those remarks, but he added that Chinese manufacturing is putting “Americans out of work” and “American businesses into bankruptcy.” This is a fallacious argument that has been debunked multiple times: Technology has led to fewer workers in manufacturing and Chinese taxpayers subsidizing their exports benefits American consumers.
China’s Ministry of Foreign Affairs has already responded to the reports, vowing to impose countermeasures.
“If the U.S. takes measures to further escalate the situation, we will surely take countermeasures to uphold our legitimate rights and interests,” ministry spokesman Geng Shuang told a news conference, adding that the trade disputes should be resolved through negotiations that are based on “equality and respect as well as established rules and credibility.”
The proposal could be officially announced as early as Wednesday, and it could go into effect by October.
What’s the End Game?
This isn’t the first time that the Trump administration has wanted to ramp up the trade war. Speaking in a recent interview with CNBC, Trump said he is “ready to go” to implement import taxes on all $500 billion worth of Chinese products, arguing that the U.S. has been taken advantage of for far too long.
So, what exactly is the end game in all of this? What if China weathers the economic storm? What if Beijing refuses to make trade concessions? There are many questions to be asked in this journey.
From the moment the Trump administration fired the first shot in this trade war to officials now wanting to penalize China on bogus currency manipulation charges, there have been many victims, and most of them have bled red, white, and blue. Consumers are paying higher prices, agriculture is losing business, and taxpayers are getting more taxed. If this is what winning a trade war looks like, it’d be better to raise the white flag now.
The only casualty that might be acceptable in this protectionist pursuit is Trump firing Navarro. Let’s hope the reports are accurate.
Do you think Washington should double tariffs? Let us know in the comments section!Whatfinger.com