US still has several ‘bullets’ left to use in the trade war; President Trump warns China

Washington/Beijing: ‘The United States will be imposing 25% tax on the Chinese imports worth $200 billion. If China retaliates we will take a bigger action. The US has more bullets than China for the trade war,’ was the stern warning issued by President Trump. US Secretary of Commerce, Wilbur Ross had recently retorted that China has exhausted all its bullets in the trade war. Endorsing the same, President Trump has indicated a sterner action.

A few days ago, President Trump had announced the imposition of 10% tax on Chinese imports worth $200 billion saying that China had not accepted the demand to give a fair treatment to the US in the bilateral trade. Trump had also warned that if China retaliated, another $267 billion worth of Chinese imports would be subjected to tax. China subsequently announced the imposition of tax on US imports worth USD 60 billion.

The United States has reacted very strongly to this action. US Secretary of Commerce Wilbur Ross, referring to the bilateral trade, pointed out that there were hardly any options left with China. President Trump has adopted a more aggressive stance, warning of a much bigger action. This reaction by Trump seems to be ensuing from the Chinese decision to end the trade negotiations with the United States.

The United States has imposed tax on Chinese imports worth $50 billion over the last six months and has threatened to tax the entire Chinese imports which are worth $500 billion. In retaliation, China taxed US imports worth $50 billion. But retaliation against the actions taken by the US is becoming more and more difficult for China as is evident from its responses. After an initial aggressive stance, China has consistently taken a stand of negotiating with the United States. But Trump’s statement suggests that nothing has emerged from these discussions.

President Trump has repeatedly clarified that there is an imbalance in the trade with China and the onus of correcting that imbalance lies with China while making the tax announcements over the last six months. But expressing displeasure over Trump’s policies, China has avoided taking any corrective actions.

The statistics published in the last two months have shown that the trade war with the United States has had adverse effects on the Chinese economy. But China has not learnt its lesson from this and still continues to retaliate against the United States’ actions.