US president Donald Trump unleashed a confrontational trade war against China on Monday.
He massively increased the range of Chinese goods that will be subject to tariffs—taxes—when they are exported to the US.
Trump said he will impose tariffs on an additional £150 billion worth of Chinese exports. They will start at 10 percent but could be raised to 25 percent next year.
This follows tariffs imposed on £40 billion of Chinese exports earlier this year. China has vowed to retaliate.
After the latest tariff increases take effect, more than half of China’s exports to the US will be hit.
Nearly 85 percent of US exports to China will also be affected.
The Financial Times newspaper commented, “What was once a trade spat affecting just 15 percent of bilateral trade is now a full-blown trade war not seen since the 1930s.”
The world’s two biggest national economies are now facing off in a process that will push up prices of goods for ordinary workers and ratchet up global tension.
The cycle of retaliatory measures will make this worse.
Trump said if China carries out its threat to impose increased tariffs on US goods, he will target almost the entirety of Chinese exports for tariffs.
Another phase of the trade wars is being planned against European Union firms. US officials are discussing measures against companies if they maintain economic ties with Iran after 4 November.
This is when the US is set to tear up the Iran nuclear deal. The US is no longer able to dominate the world through unchallenged economic power.
So it is forced to rely more and more on measures such as tariffs against its competitors along with military threats to weaker countries.
A series of business lobby groups and retail employers attacked Trump’s moves this week. They think it will be bad for profits.
But Trump is escalating because he sees a trade war as a useful political strategy ahead of the 6 November midterm elections. A third of the Senate and the whole of the House of Representatives are up for election.
Trump wants to strut in his “Make America great again” pose once more. Trade wars are also a useful distraction from the gathering storm over his links to criminals.
Last week former Trump campaign chair Paul Manafort pled guilty to conspiracy charges.
To cut his sentence, he has agreed that he will become a cooperating witness for the investigation into alleged collusion between the Trump campaign and Russia during the 2016 election.
In the hands of capitalists, both free trade policies and protectionism are used against workers.
The Tory party is continuing to rip itself to shreds over Brexit.
Theresa May’s Chequers deal would see Britain and the European Union agree to a “common rulebook” for trade.
But Boris Johnson and others want a free trade agreement similar to the one Canada uses.
In an interview with the BBC’s Panorama programme, May said the only alternative to her Chequers deal is no deal.
Christine Lagarde, head of the International Monetary Fund, held a press conference on the day it aired to argue that a no deal Brexit would be disastrous.
And chancellor Philip Hammond said the scenario “put at risk the significant progress made over the past ten years in repairing the economy”.
Such warnings may bolster May against other sections of the Tories.
But they do not make it easier for May to get her deal through parliament.
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