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How Will Trump's Tariffs Impact US, China Trade?

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Moomoo News Apr 9 05:47 · 23.1k Views

Gary Locke, Former Ambassador to China, discusses what may happen to the trading relationship between China & the US if the Trump Administration decides to impose a 104% tariff on China Wednesday. Locke goes into detail on how this 104% tariff will affect the prices of goods Americans buy, and make American made goods less appealing to Chinese consumers. He also talks about whether President Trump's reciprocal tariffs will make US trading partners more likely to trade with China rather than the US. Gary Locke speaks with Kailey Leinz and Joe Mathieu on the late edition of Bloomberg's "Balance of Power."

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Transcript

  • 00:00 If this actually goes into effect at midnight, what is going to happen to the trade relationship between the two largest economies?
  • 00:06 Well, this is really going to hurt consumers and workers on both sides of the Pacific because so much of what Americans consume every single day,
  • 00:14 whether it's shoes, clothes,
  • 00:16 tools, sporting goods,
  • 00:19 appliances are made in China.
  • 00:21 And so if if the prices for those items
  • 00:25 that are purchased by the Costco's and the Walmart's and the Home Depot's of the world double in price,
  • 00:31 you know darn well they're going to pass those increased costs on to everyday consumers.
  • 00:35 And that means Americans are going to suffer in the pocketbook.
  • 00:39 At the same time, it means that Americans will buy less from China
  • 00:43 because they can't afford it.
  • 00:44 And that means China produces less, which then means higher unemployment for the workers in China.
  • 00:50 And of course, when China
  • 00:52 retaliates
  • 00:53 and
  • 00:54 puts huge tariffs on American goods, it makes American products less attractive.
  • 00:59 And therefore, the Chinese don't have to buy
  • 01:02 our soybeans, don't have to buy Boeing airplanes.
  • 01:04 They can buy
  • 01:05 medical equipment from Germany.
  • 01:07 They can buy soybeans from Brazil.
  • 01:09 They can buy Airbus.
  • 01:12 Well, Ambassador, I'd love for you to bring us to the psychology
  • 01:15 right now in Beijing.
  • 01:16 The response that we saw last evening from China's Commerce Ministry, the statement
  • 01:21 referred to this as blackmail, the US threat to escalate tariffs.
  • 01:26 China will never accept it.
  • 01:27 If the US insists on its own way, China will fight to the end.
  • 01:31 You take Beijing at its word.
  • 01:34 Well, I think you have two a very proud
  • 01:37 executives, President Trump
  • 01:40 and President Xi Jinping.
  • 01:41 And China does not want to be seen around the world as capitulating to what it perceives as
  • 01:49 reckless
  • 01:50 extortionist tactics by America.
  • 01:53 That's why you're also seeing other countries around the world,
  • 01:56 some of our closest allies and neighbors, wondering why
  • 01:59 they're being
  • 02:00 subject
  • 02:01 to these tariffs when in fact
  • 02:03 there is no trade surplus
  • 02:06 by those countries toward the United States in which America has a trade surplus, let's say, with Australia.
  • 02:11 And why are they being subjected to these tariffs?
  • 02:14 And so the same thing with Canada.
  • 02:16 And the list goes on and on.
  • 02:17 We've got to figure out a way to get out of this.
  • 02:19 And let's hope that there are negotiations that these tariffs can come down
  • 02:24 because people on both sides, both countries, the workers and the consumers in all these different countries, including America, are going to suffer.
  • 02:33 Well.
  • 02:33 And it's not just about the tariffs, it strikes me, Ambassador, but other mechanisms through which China could potentially retaliate against the US as well.
  • 02:41 We all watched as the offshore yuan
  • 02:43 fell to a new record low against the US dollar today.
  • 02:46 Would you expect that
  • 02:47 Beijing is going to potentially look to its currency or look to its
  • 02:52 practices around US businesses
  • 02:54 conducting their operations in China as part of this as well?
  • 02:59 Well,
  • 02:59 China has many tools and it's a toolbox.
  • 03:02 Just as America has tried to
  • 03:05 not use tariffs, but actually restrict
  • 03:07 exports of high technology
  • 03:09 to China, even the
  • 03:11 banning exports of equipment that could be used to make semiconductors in China
  • 03:16 or to say Americans can't invest in some of these technology sectors within China.
  • 03:21 China can do the same thing.
  • 03:22 They can actually say that certain
  • 03:24 items
  • 03:25 cannot be sold to America, cannot even be brought in from America.
  • 03:29 And they certainly can say
  • 03:31 on the, on the grounds of national security, they're not going to allow the sale of their rare earths, their their
  • 03:37 rare minerals
  • 03:38 to other countries, including America,
  • 03:41 which these these minerals are,
  • 03:43 are incredibly necessary
  • 03:45 for our semiconductors and our high tech
  • 03:48 industry.
  • 03:51 Ambassador, we've been hearing a lot about tariff evasion
  • 03:53 from this White House, China sending goods
  • 03:56 destined for the US through Vietnam, for instance.
  • 03:59 How widespread is this problem?
  • 04:01 And if this 104% combined tariff takes
  • 04:04 effect later, will it actually make a difference?
  • 04:07 Well, even under the Biden administration, the Commerce Department was looking at
  • 04:12 the China
  • 04:13 sending things through other countries, whether it's a Vietnam or other things,
  • 04:17 other areas.
  • 04:19 And if they were simply repackaging it
  • 04:22 in another country and slapping that country's label on it and then sending it to the United States, then we would stop that.
  • 04:29 And we had
  • 04:30 huge penalties against the Chinese suppliers doing that.
  • 04:33 And that was true under the Obama administration, Biden administration,
  • 04:37 and even under
  • 04:38 President Trump's first administration.
  • 04:40 But if, for instance,
  • 04:41 they're actually moving their manufacturing facilities to these other countries,
  • 04:46 that's legitimate.
  • 04:47 In fact, American companies are hoping
  • 04:50 to diversify their supply chain by purchasing these products made in other countries.
  • 04:55 It may be the product, may be the manufacturer may be a Chinese company, but.
  • 05:00 Being manufactured someplace else
  • 05:02 and that's legitimate and that's fair.
  • 05:04 But to simply slap
  • 05:06 a label made in
  • 05:08 X country when in fact it's not
  • 05:11 to avoid
  • 05:12 the tariffs and countervailing duties and and things that we impose on Chinese goods, That's not right.
  • 05:20 Well, an ambassador to these tariffs on China are not happening in a vacuum.
  • 05:23 They'll go into effect at the same time reciprocal tariffs across
  • 05:27 all of EU s s
  • 05:28 trading partners are.
  • 05:29 And I wonder if you view that
  • 05:31 action we're taking, even with allies in some instances, actually may push some of those very same countries toward China and make China somehow,
  • 05:39 if not a net beneficiary, at least have a bright side to this entire
  • 05:44 trade war the president has started.
  • 05:47 Well, China obviously will try to develop closer economic relations with other countries,
  • 05:53 encouraging those other countries to set up operations in China.
  • 05:56 They will try to supply more items to
  • 05:59 these other countries instead of to the United States.
  • 06:01 But United States is still a major
  • 06:04 destination for Chinese goods,
  • 06:06 and to
  • 06:07 be cut off from the American market
  • 06:10 because
  • 06:11 of the Super high tariffs
  • 06:13 is is going to hurt China and it will hurt America.
  • 06:17 But China's going to be looking at other ways in which it can make up the loss
  • 06:21 of exports to the United States because
  • 06:25 of these tariffs.
  • 06:25 Because what happens with these tariffs is that
  • 06:28 prices are going to double.
  • 06:30 At least the manufacturers and the companies ordering these products, whether it's
  • 06:34 sporting goods stores,
  • 06:37 manufacturers that need components from China,
  • 06:39 their cost will double
  • 06:41 and they can only pass that on to the ultimate purchaser and their consumer.
  • 06:46 And so it's it's bad on both sides.
  • 06:50 Donald Trump says he's waiting for their call.
  • 06:52 Ambassador, will he get it?
  • 06:55 Well, I'm not sure that
  • 06:56 the
  • 06:57 the Chinese will make that call.
  • 06:59 Perhaps it's going to have to be a
  • 07:00 a neutral
  • 07:02 intermediary, negotiator, third party
  • 07:05 that tries to bring the two sides together.
  • 07:07 Donald Trump is not going to make that first call.
  • 07:10 Xi Jinping is not going to make that first call.