When it seemed that the trade war between the United States and China had not intensified enormously, today both powers have taken more steps that can lead to an anecdote of what has happened so far, especially if they maintain their positions in the coming months.
The United States decided to intensify the commercial war by imposing tariffs of 10% on Chinese products worth 300,000 million dollars on Chinese imports as of September 1, to which Beijing today responded by announcing additional tariffs of 5% or 10% in a total of 5,078 products from the United States, including aviation, crude and soy parts. The total value is estimated at $ 75 billion.
The Chinese government has also recanted its decision not to impose measures on vehicle imports, something that will increase the tension even more. In this sense, nothing announced by the Government of Xi Jinping can be compared to what Donald Trump has published this afternoon on Twitter.
Trump accuses China of stealing billions in intellectual property, and “orders” companies to seek alternatives to China
The US president has been quick to respond to Beijing’s tariff measures, and instead of seeking dialogue, he has added more fuel to the fire:
“Our country has stupidly lost billions of dollars with China for many years. They have stolen our intellectual property at the rate of hundreds of billions of dollars a year, and they want to continue. I won’t let that happen! We don’t need China and frankly, we would be much better without them.
The huge amounts of money earned and stolen by China from the United States, year after year, for decades, MUST BE STOPPED. Our large American companies are commanded to immediately begin looking for an alternative to China, which includes bringing their companies to CASA and manufacturing their products in the United States. I will respond to China’s tariffs this afternoon. This is a GREAT opportunity for the United States.
In addition, I am ordering all operators, including Fed Ex, Amazon, UPS and the Post Office, to SEEK AND REJECT all deliveries of Fentanyl from China (or anywhere else!). Fentanyl kills 100,000 Americans a year. President Xi said this would stop, it did not happen. Our economy, due to our earnings over the past two and a half years, is MUCH larger than that of China. We will keep it that way! “
The message leaves no doubt. Trump, without an executive order in between, (and Twitter is not yet legally binding), has ordered large companies to stop manufacturing in China and take the companies to US territory. This is something that fits very well in his ideology and electoral promises, although he does not usually express it with this firmness. Where this protectionism does not fit so much is in the liberal tradition of the United States.
What does this mean for the great Chinese and American techs
The technological implications if the order becomes effective and the companies respond are incalculable. On the one hand, Huawei may lose all possibility that the veto will be revoked, given the growth of tension and the constant demonstration of strength.
On the other hand, all American technology manufacturers, see Apple, Amazon, Microsoft, Intel or Qualcomm, along with others from other sectors, would be greatly damaged, and not just because producing in the United States is more expensive. Also because China is an important market for many of these companies, and because their operations and supply management systems are set up to work manufacturing in the Asian giant.
On the reasons why, for Apple, it is much better to manufacture in China than in the United States, the CEO of Apple already expanded in 2017: “The skill here [in China] is simply incredible. Making Apple products requires latest machines generation and many people who know how to manage them. In the United States, I could have a tool engineers meeting and I’m not sure we can fill the room. In China, you could fill several soccer fields.”
That is, the matter can go far beyond the economic moving to the technical. It is what China has for decades has become “the factory of the world.” For years there has been talk of India or Indonesia successor to China in the productive sense, but they are still not an alternative that companies choose for the bulk of manufacturing.
On the tariffs themselves, Trump already acknowledged that Tim Cook, CEO of Apple, “provided a very good argument” about avoiding them, as Apple would be in a very weak position against Samsung for coming from South Korea, a country that would not be affected the tariffs.
For the end-user, the results of this war, if it continues, can also be dire. If prices have risen in general in recent years, especially in high-end, tariffs on smartphones and their components can cause prices to skyrocket because rates have an impact on what is paid in stores, and because the offer decreases greatly as it cannot manufacture at the rhythm of the Chinese factories The European Union could benefit from the war, but precisely today we have learned that European Commission officials have proposed to establish tariffs on US imports, something that, if approved, would involve us deeply in a conflict that was already global.