Tariffs Archives - Friends of Socialist China

China strengthens neighbourhood ties in response to US economic coercion

The following article by Dirk Nimmegeers, which originally appeared on the China Square website, seeks to understand the rationale for the Trump administration’s seemingly bizarre tariff war, noting that it is a component of the US’s long-term strategy of containing China.

The US is using assorted means – persuasive and coercive – to win other countries to its side in its campaign of aggression against China. China meanwhile is “is forming or strengthen coalitions with continents, countries, regions and international organisations”, particularly among its Asian neighbours. “Correct relations, the strengthening of mutual trust and regular contacts between China and those neighbours, and among those same countries, are conducive to peace and prosperity.”

The article provides valuable context for President Xi Jinping’s visit to Vietnam, Malaysia and Cambodia this week.

The article was translated into English from the original Dutch by the author.

Madness?

Most people believe President Trump’s erratic policies will harm the US’s economic interests and alienate its allies. However, it is conceivable that, as Polonius said of Hamlet, ‘though this be madness, yet there is method in’t’. In other words, that there exists a rationale for Trump’s behaviour beyond simple folly and deranged impulsiveness.

In Europe, for instance, the US president has already succeeded in getting his demands for increased financial contributions to NATO accepted by allies. His team has doubled down on distrust of China and has escalated tensions even further than team Biden. In Europe, many influential groups and individuals would rather strike a deal with Washington than cooperate with Beijing.

By means of a global import blackmail, and somewhat later granting a 90-day reprieve to all countries except China, Trump and his ministers and advisers are trying to hit the People’s Republic hard. They want to undermine China’s growth and force China to accept US trade terms. Further, their aim is to punish China for its success in building a modern economy and technology and for its refusal to bow to US rule.

Targeting China and its neighbours

Moreover, Trump and co plan to entice other countries to side with the US against China, and if that fails, to force them to do so. The US elite successfully fought the socialist countries of Europe through an ideological Cold War, imperialist warfare worldwide, fomenting divisions, and a major arms race. Today, in the renewed Cold War, Generation Trump is deploying different tactics against the world’s largest socialist country. In this, financial and economic tactics play an important role.

The Chinese government says it is not seeking a fight with the US, but is ready to take it “to the end” if Washington forces it to do so. This is not grandstanding. The People’s Republic of China has a political leadership that enjoys strong political support from the people and is proving that both with economic growth and technological innovation, it has firmly established its policies and the means to defend them. The Chinese government, under the leadership of the Communist Party, primarily represents the interests of the vast majority of Chinese citizens.

Two-track policy

In doing so, however, it also champions economic globalisation that may benefit all countries. China favours an international system monitored and protected by institutions such as the United Nations, the World Trade Organisation, the International Atomic Energy Agency (IAEA) or the World Health Organisation. China takes initiatives for groupings that offer the countries of the Global South in particular new development opportunities and help them to pursue an independent course. The combination of taking care of domestic interests on the one hand and concern ‘for a shared future for humanity’ on the other is reflected in an economic and a geopolitical programme. Economically, this is called a dual circulation strategy. Geopolitically, China makes the case for its sovereignty and territorial integrity, as well as for multipolarity and peace policy. Driven by President Xi Jinping, Beijing is taking global initiatives such as the Global Development Initiative, the Global Security Initiative and the Global Civilisation Initiative.

To maximise the chances of success, the People’s Republic is forming or strengthen coalitions with continents, countries, regions and international organisations. Preferential countries for this are its Asian neighbours. It is quite obvious why. First of all, there is the importance of their friendship for national defence, but also for the number of people and social strata in China that live and benefit from trade. China no longer depends on imports and exports to the extent that it did at the beginning of the century; nevertheless these sectors remain essential and have a strong input in the domestic debate.

Which neighbouring countries?

China has land borders with no less than 14 states: Vietnam, Laos, Myanmar, Bhutan, Nepal, India, Pakistan, Afghanistan, Tajikistan, Kyrgyzstan, Kazakhstan, Mongolia, Russia and the Democratic People’s Republic of Korea (North Korea). In addition, there are neighbouring countries in Asia from which the People’s Republic is only separated by maritime areas, such as the Philippines, the Republic of Korea (South Korea) and Japan. Some more distant countries such as Cambodia, Thailand, Malaysia, Singapore, Indonesia, Brunei, East Timor also belong to the Southeast Asian neighbourhood region of China.

Correct relations, the strengthening of mutual trust and regular contacts between China and those neighbours, and among those same countries, are conducive to peace and prosperity. That’s why China has resolved most border issues with its neighbouring countries. In the region, Beijing seeks peaceful agreements between countries with divergent interests in the South China and East China Seas. A roadmap towards peaceful reunification with China’s Taiwan province is also vital for China’s territorial integrity in that context.

Needless to say, peace and prosperity are further served by China’s excellent economic and political relations with the Association of Southeast Asian Nations (ASEAN). The same goes for the Regional Comprehensive Economic Partnership (RCEP), in which China plays a leading role as a co-founding member. Measured by GDP, RCEP is the largest free trade agreement in the world. It unites the 10 countries of ASEAN, as well as Japan, South Korea, Australia and New Zealand, in addition to China itself. Cambodian expert Thong Mengdavid speaks of a “mega-trade pact, covering about 2.3 billion people, which has shown its ability to boost regional economic growth, promote trade liberalisation and foster deeper integration among members”. According to Thong, this is “proof of the power of economic integration. It proves that cooperation, not isolation, leads to prosperity.”

Two visions on international politics

Western views and approaches to global politics are based on ‘prosperity through self-interest and neo-colonialism’ and ‘peace through domination and conflict’. Trump’s Make America Great Again is currently the most extreme example of this. China refuses to submit to it and, within the framework of its socialist project, offers an attractive alternative to it.

Contradictions in neighbouring countries

Many of China’s neighbours experience contradictions between, on the one hand, supporters of closer relations with the People’s Republic and, on the other, supporters of submission to the US or a continued alliance with it. In addition, there is always a current that refuses to make a choice, but is often forced to do so by the course of history. In the Republic of Korea (South Korea), for example, the political world is torn between a Democratic Party that wants rapprochement with China and peace with North Korea, and a party of politicians who believe that the country’s interests are best served by continued obedience to the United States. In Japan, some politicians are more open to the alliance between Washington, Seoul and Tokyo, while others prefer a trilateral with Beijing.

Indian ministers and other policymakers aspire to become a rival to the People’s Republic as an Asian superpower, so they are offering the West their services, and participating in projects like the India – Middle East – Europe Economic Corridor (IMEC). IMEC would like to be a rival to the Belt and Road Initiative (BRI). Hostility with Pakistan, a prominent participant in the BRI, is one of the reasons for this. These Indian nationalists hinder their political opponents who want to go forward on the logical path of peace and progress between two Asian giant civilisations. Vietnam has a political system and economic policies closely akin to China’s, and a history of socialist brotherly relations with the People’s Republic. But even there, there are apparently groups that, for various reasons, seem to advocate accommodation with the United States, the historical imperialist enemy.

To be continued

Understandably, then, Chinese President Xi Jinping wants to ‘strengthen strategic ties with neighbouring countries’. China plans to do this ‘by taking differences into account appropriately and strengthening supply chain ties’. These remarks were made at a central working conference on diplomacy with neighbouring countries held by the CPC in Beijing on Tuesday and Wednesday of last week.

With the following terms China’s foreign ministry announced Xi Jinping’s trip to important neighbouring countries this week. ‘At the invitation of General Secretary of the Central Committee of the Communist Party of Vietnam to Lam and President of the Socialist Republic of Vietnam Luong Cuong, General Secretary of the Central Committee of the Communist Party of China and President of China Xi Jinping will pay a state visit to Vietnam from 14 to 15 April. At the invitation of the King of Malaysia, His Majesty Sultan Ibrahim, and King Norodom Sihamoni of Cambodia, President Xi Jinping will pay a state visit to Malaysia and Cambodia from 15 to 18 April.’

We look forward to learning what opportunities the negotiators agree on for countering MAGA man Trump.

Sources: Xinhua, Min. BuZa China, Friends of Socialist China, Pascalcoppens.com, China Daily, Global Times, Unachina.org, Clingendael.org, South China Morning Post, Asia Times, Morning Star, Geopolitical Economy Report

China Daily editorial: the US is not getting ripped off by anybody

We are pleased to republish below a brief editorial in China Daily about the US administration’s hysterical claims that China and other countries are “ripping off” the US via their trade policies. The editorial notes that such claims are being used to justify the US’s unilateral imposition of tariffs, which in turn “provides leverage for the US administration to extract concessions in terms of the real trade war it is waging against China and in reshaping the bilateral relations with the US’s other trade partners in favour of the US by extorting undue concessions”.

The author writes that the US’s trade deficit is not the result of unfair trade practices pursued by other countries, but rather the US’s own economic policies of several decades, pursued in the specific interests of the US capitalist class. What’s more, even if the unilateral tariffs result in more companies investing in manufacturing in the US, this will not create the vast wave of employment being touted by the White House. “The cost of labour in the US means it is more economically viable for machines to do the work than humans.”

In reality, “the US is not getting ripped off by anybody. The problem is the US has been living beyond its means for decades. It consumes more than it produces. It has outsourced its manufacturing and borrowed money in order to have a higher standard of living than it’s entitled to based on its productivity. Rather than being ‘cheated’, the US has been taking a free ride on the globalisation train.” These comments were sufficiently persuasive that they were reported more-or-less neutrally in the Guardian, which is notable given the paper’s usual anti-China stance.

The editorial concludes:

The US should stop whining about itself being a victim in global trade and put an end to its capricious and destructive behaviour. Instead, it should commit itself to working with its trading partners to establish a fair, free and WTO-centred multilateral trading system that is in line with the times.

The US administration has long accused foreign countries of taking advantage of the United States at the expense of domestic jobs and US industries. In US President Donald Trump’s view, the US has received less return value and resources for what it has given the world in terms of the amount of money, trade preferences and other resources. “They’re ripping us off” is his constant refrain.

It is this fabricated premise of a long-standing grievance that has been the launchpad for his administration’s sweeping “Liberation Day” tariffs targeting almost all foreign imports, and which have set up a global trade war and promise to upend the decades-old global trading order.

Though the US leader hit a 90-day pause button on many of the tariffs after his radical power play resulted in US stocks volatility, bond yields surging and recession fears intensifying, his administration’s haughty demolition job on the global trade system is far from over, not least because there is still a 10 percent tariff on virtually all exports to the United States. This provides leverage for the US administration to extract concessions in terms of the real trade war it is waging against China and in reshaping the bilateral relations with the US’ other trade partners in favor of the US by extorting undue concessions.

One of the aims of the US administration is to use the tariffs to close, if not reverse, the trade deficits with nearly all of the US’ trade partners. The preoccupation with trade deficits stems from a warped idea that they are proof that the US has been exploited by other countries. This has also made the US president and his trade advisers wrongly claim that the current rules governing global trade have put the US at a distinct disadvantage.

This is contrary to the belief of mainstream economists that a trade deficit simply means a country is importing more goods and services from a given country than it is exporting to that market, and has nothing to do with the state of a country’s economic health.

While bemoaning surging deficits in the US’ trade of goods with other countries, the US administration has deliberately ignored the fact that the US sells far more services than it buys from other countries, which means the US’ service sector enjoys a trade surplus with almost every trading partner around the world, including those at the center of the ongoing trade war such as China and the European Union. The service sector includes retailers, software, internet and telecom providers, movie studios, as well as health care providers, law firms and accounting agencies. According to the US Commerce Department, the US’ trade surplus in services rose to $293 billion in 2024, up 5 percent from 2023, and 25 percent from 2022.

Trade in services, especially finance, legal, entertainment, and high-tech services, has become a major source of US economic strength. In 2023, US services exports were worth more than $1 trillion, accounting for 13 percent of the global total, and they expanded a further 8 percent last year, according to the World Trade Organization. “Global trade in services … is booming. And there is a clear winner on this front: the United States,” wrote Ngozi Okonjo-Iweala, WTO director-general.

Moreover, Trump’s claim that foreign countries steal US manufacturing jobs through unfair trade practices, and that only sweeping tariffs will help the US reverse the decades-long decline in manufacturing and create related jobs is out of step with historical realities.

This is because service sector jobs have long driven the US economy — the sector employed 57 percent of private sector nonfarm workers in 1939, when the US Labor Department started tracking US employment, and today, service sector businesses account for 84 percent of those jobs.

The modern manufacturing reality suggests that, even if US companies do reshore, the cost of labor in the US means it is more economically viable for machines to do the work than humans.

The US is not getting ripped off by anybody. The problem is the US has been living beyond its means for decades. It consumes more than it produces. It has outsourced its manufacturing and borrowed money in order to have a higher standard of living than it’s entitled to based on its productivity. Rather than being “cheated”, the US has been taking a free ride on the globalization train.

The US should stop whining about itself being a victim in global trade and put an end to its capricious and destructive behavior. Instead, it should commit itself to working with its trading partners to establish a fair, free and WTO-centered multilateral trading system that is in line with the times.

Statement: Say no to Trump’s tariffs and anti-China policy

The following statement has been issued by the Friends of Socialist China US Committee in response to the Trump administration’s announcement of new tariffs on Chinese imports.

The Trump administration’s decision to slap additional tariffs on the People’s Republic of China is something that should be condemned by every person who cares about peace and progress. These moves are making the world a more dangerous place and are part of a larger anti-China policy being pursued by the Trump administration – a policy begun under the Obama administration and deepened during the Biden administration.

These tariffs are in effect a tax on working people here in the United States and will result in rising prices for our necessities and wants. They will have no impact whatsoever on the lifestyles of the billionaires. Indeed, the money raised from increased prices will be used to fund the Trump regime’s tax cuts for the super-rich. Furthermore, these tariffs will harm the U.S. economy more than China’s. People’s China has a more diversified economy, more trading partners, and a greater share of world trade.

To quote Mao Zedong, “Lifting a rock only to drop it on one’s own feet is a Chinese folk saying to describe the behavior of certain fools.” This certainly applies to Trump and his wealthy backers.

The tariffs against China exist in a larger context. The U.S. empire is in a state of stagnation and decline, while People’s China is developing at an incredible speed. Wall Street and the Pentagon are working to “contain” and encircle China. They are increasing the spending for war preparations, attempting to draw countries in the region into hostile alliances aimed at China, and encouraging separatist forces in Taiwan, Tibet and Xinjiang. The tariffs supplement the hundreds of U.S. sanctions against China in textiles, solar energy, computers and more.

For the past decade, U.S. policy makers have talked about “decoupling” the U.S. economy from that of China. Washington DC’s trade war is a part of that process, and it cannot be separated from preparations for other kinds of war in the Pacific, including those fought by military means.

Socialist China has made incredible achievements. China has waged a real war on poverty, while the U.S. government is waging a war on working people. China is by far the world leader in renewable energy production, electric transport, biodiversity protection and afforestation. China takes public health seriously. That’s why its life expectancy consistently goes up. Here in the U.S., we have measles outbreaks, and vaccine “skeptics” running the show. China wants peace. No serious person can say that about the U.S. today.

We demand that the tariffs directed at China be rolled back. We oppose the Trump administration’s anti-China policy, including any and all preparations for war. And we stand in solidarity with socialist China as it heads into a bright future.

Trump’s tariff tantrums

With the Trump administration’s increasingly aggressive tariff measures, economists are warning of the risk of an international trade war, with the US and China as its major antagonists. To provide some much-needed clarity on this issue, we are pleased to republish below two recent articles from British Marxist economist Michael Roberts.

Michael describes the core of Trump’s tariff strategy as aiming to “make America ‘great again’ by raising the cost of importing foreign goods for American companies and households and so reduce demand and the huge trade deficit that the US currently runs with the rest of the world”. According to the US government, this will boost incomes and jobs in the US. Furthermore, the extra tariff revenues will boost Treasury coffers, supporting the administration’s plan to cut income tax and corporation tax.

What will the actual effect of the tariffs be? Michael argues that the tariffs will not reduce the US trade deficit, but will instead raise prices for US consumers and reduce the competitiveness of US companies. Inflation will rise, taxes will be cut, federal spending will be gutted – meaning that the consequences for the US working class will be dire. At a global level, “increased tariffs and other protectionist measures by all sides in retaliation will weaken world trade and economic growth. World trade growth showed some recovery in 2024 after contracting in 2023. Trump’s tariffs will stop that recovery in its tracks.”

Countering those economists who argue that tariffs have always been a valuable tool for nurturing domestic industry, Michael writes: “The US in the 21st century is not an emerging industrial power that needs to protect burgeoning new industries from powerful competitors. Instead, it is a mature economy with a declining industrial sector that will not be restored in any significant way by tariffs on Chinese or European imports.”

Further:

American capital did not invest to sustain its manufacturing superiority because the profitability of that sector had fallen too mcuh. Instead, they switched to investing in financial assets and/or shifting their industrial power abroad. In the last couple of decades they hoped to sustain an advantage in hi-tech and information technology including AI. Now even that is under threat. But this is not the fault of China running an ‘unfair’ industrial trade policy that is based on suppressing the living standards of its people; on the contrary, it is the failure of US capital to sustain its hegemony, just as Britain did in the late 19th century.

The two articles were first published on The Next Recession blog.

Trump’s tariff tantrums

Feb. 4 (The Next Recession) — Over the weekend President Donald Trump announced a batch of tariff increases on US imports of goods from the closest partners of US trade, Canada and Mexico. He proposed a 25% rise in tariffs (with a lower rate for oil imports from Canada). Then he announced a 10% rise in tariffs on all Chinese imports. Thus Trump started his new trade war.

And yet as soon as he started it, he stepped back. Trump announced that he was postponing the tariff increases with Canada and Mexico for a month because their governments had agreed to do something about the smuggling of fenatyl drugs into the US, which he claimed was killing 200,000 Americans every year. This figure is nonsense, of course, because under 100,000 Americans die from drug overdoses from all chemicals each year. As it is, the smuggling of fenatyl over the US-Canadian border is miniscule – certainly compared to the drug cartel operations on the Mexican border. Moreover, as Mexican President Sheinbaum pointed out to Trump, the cartels are able to operate their violent methods because of gun running operated by Americans in the US.

The Canadian and Mexican governments rushed to do a deal with Trump, promising batches of troops on the borders to stop trafficking and more joint anti-drug forces with the US etc. This seems to be enough for Trump to postpone his tariff move, although the tariffs on China will go ahead (no drugs there?). Also small package imports that have been free of import tax up to now will be brought into the customs system – and that will hit internet online purchases made by Americans for goods from abroad.

So what are we to learn from these shenanigans? Are the threatened tariff increases merely being used to browbeat other countries into concessions to Trump? Or is there a coherent economy policy in all this?

There is method in this madness. On the external front, Trump aims to make America ‘great again’ by raising the cost of importing foreign goods for American companies and households and so reduce demand and the huge trade deficit that the US currently runs with the rest of the world. He wants to reduce that and force foreign companies to invest and operate within the US rather than export to it.

He reckons this will boost incomes and jobs for Americans. And with the extra tariff revenues, the government will have sufficient funds to cut income taxes and corporate profit taxes to the bone (indeed, Trump says he wants to abolish income tax altogether). If this is the plan, then the tariffs will eventually be applied fully, with China probably getting an even bigger increase.

Trump, tariffs and the working class

The two articles below address the tariffs recently announced by the US against China, Canada and Mexico.

The first article, written by Friends of Socialist China advisory group member and International Manifesto Group convenor Radhika Desai, republished from CGTN, points to the cynical economic motives for these tariffs: to rob from the poor to pay the rich. Since the cost of tariffs is passed on to consumers, they constitute a stealth tax on ordinary Americans, and will help make up for the loss of revenue resulting from the Trump regime’s tax cuts for the super-rich.

The cost of the tariffs will be paid by ordinary US consumers. And they will pay in order that the richest US taxpayers can enjoy greater tax cuts, which is the key reason why Trump needs the tariff revenues.

Tariffs will also drive up inflation, further impacting living conditions of the working class.

The putative aim of the tariffs is to bolster US manufacturing. However, “for US capital, given its decades-long reluctance to invest productively at home, it’s going to take a lot more than tariffs. US capital needs to be turned away from the unproductive, predatory and speculative financial ventures in which it is engaged and towards serious productive investment.”

The second article, republished from Workers World, details the likely negative impact of the tariffs on the US economy, and denounces the Trump administration’s threats against the BRICS countries.

Attacks against BRICS are detrimental to workers in G7 countries… BRICS countries are displaying self-sufficiency and independence from Western imperialism and settler colonialism. Relations between China and Russia have also strengthened because of BRICS. Many countries in the Global South have less of a need to trade with the U.S. than they did in previous decades, and therefore they have more leverage to maintain sovereignty.

The article concludes:

Trump’s promotion of tariffs is harmful to workers all over the globe. Imperialist protectionism and isolationism are an obstacle to working-class unity, and they should be opposed. International solidarity is necessary in resisting anti-worker tariffs and defeating the racist, xenophobic “America First” agenda. Workers and oppressed peoples of the world, unite!

Trump’s empty tariff brinkmanship

After days of keeping the world guessing whether he would commit to such a disastrous course, U.S. President Donald Trump has started his trade wars against his country’s three most important trade partners, Canada, Mexico and China.

In announcing the tariffs on exports from these countries, Trump was self-contradictory, claiming they were a negotiating tool designed to deal with U.S. trade deficits, and then that they were not. Their true extent remains unclear: From the apparently blanket tariffs of 25 percent on Canada and Mexico and 10 percent on China, he has already reduced tariffs on oil, natural gas and electricity from Canada to 10 percent, and uncertainty prevails over exactly which goods they will hit, how, and by how much.

The Financial Times called it “a trade war on steroids” while the Washington Post declared it “the dumbest trade war in history.” Many others said these sky-high tariffs could not be expected to last forever.

So, as the world tightens its seatbelt for a bumpy ride through the Trump quadrennial, let’s parse the real wheat from the rhetorical chaff so we can better anticipate the course of the trade wars Trump has started. The key is that Trump’s tariffs are incoherent in conception and applied for the wrong reasons.

Trump is certainly using them as negotiating tools. He claims they are superior to sanctions, which scare other countries from the dollar system he wishes to save. Exactly how adding the weaponization of trade to the weaponization of the dollar is going to help the U.S. is anyone’s guess.