China is losing the trade war with Trump and needs to cut a deal

South China Morning Post:
China should cut its losses in the trade war by conceding defeat to Donald Trump

Xu Yimiao writes that China is running out of retaliatory tariffs against the US and has watched other major parties like the EU and Japan close ranks against it. Before the trade war gets more severe, Beijing’s leaders should seek direct talks with Trump, and may have to swallow their pride

Beijing’s strategy of a tit-for-tat retaliation over tariffs has clearly failed. In fact, this strategy escalated the conflict. The direct retaliation after the US announced the first batch of 25 per cent tariffs on US$50 billion in Chinese goods (with the increase from US$34 billion just finalised and coming into effect on August 23) brought few benefits for China. If anything, it gave the US an excuse to plan for a new batch of tariffs covering US$200 billion in Chinese goods. To be fair, it is possible that the US would have escalated the conflict even if China had not retaliated, but whatever the case may be, China’s strategy did not work.

On the evening of August 3, Beijing decided to implement differentiated tariffs over US$60 billion in US exports and on August 8 released a list of an additional US$16 billion worth of American goods to hit with tariffs. Beijing is nearing its tariff retaliation limit.

It was rumoured that Beijing had been trying to line up with the Europeans, as well as other nations, to fend off the tariff threat from the US, but it seems this strategy is not working either.
The European deal with Trump took away one of China's hoped-for cards in dealing with the US.  It turns out that China's huge trade surplus with teh US is a weakness in a trade war.  They are the one with teh most to lose now.


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