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A trade war won't benefit the US

China Daily | Updated: 2018-08-29 07:29

Talks the only way out of deadlock

Yao Zhizhong, deputy director of the Institute of World Economics and Politics, Chinese Academy of Social Sciences

One thing is for sure that China and the US will hardly give in to trade threats. Since China has been upgrading its industrial structure and the US economy is growing at a healthy rate, the imposing of high tariffs on products will have limited impact on the GDP of both countries.

The US may have reached its economic development peak, but considering that it has many hidden problems such as an over-heated economy, the stiff tariffs may accelerate its economic deceleration. The rising salaries in the US that Trump has been gloating about will cause prices to rise sharply, and the high tariffs Trump has imposed on imports will raise the prices even higher leading to severe inflation-a situation no consumer wants to encounter.

Washington and Beijing have controlled their trade confrontation, though. For instance, China responded to the US' 25 percent tariffs on $16 billion worth of Chinese products by imposing the same percentage of tariffs on the same value of US goods. If the US imposes more tariffs on Chinese goods, more and more US consumers will have to pay higher prices for even daily necessities. And with China responding in kind to US tariffs, the costs of US enterprises will rise, increasing the pressure on Trump to reconsider his policies.

Besides, the European Union has said no to further talks with the US unless the latter withdraws the stiff tariffs on important EU export products. Still, the US has not lifted the 25 percent tariff on European auto and steel and 10 percent tariff on aluminum products. So the longer the US' protectionist policies continue, the more intense retaliation it will face from other economies.

Trump launched his tariff war because he did not realize that China's stock market slump, caused by deleveraging and the devaluation of the yuan, had made little difference to bilateral trade or the Chinese economy. But China should also further open up its economy and accelerate its economic transformation to prevent the US protectionist policies and tariffs from hurting its economy.

China will not accede to the US' unfair demands and will respond in kind to US tariffs, which means China will not compromise its vital interests to end the tariff war. Instead, China wants negotiations with the US on the principle of equality and mutual respect to end the tit-for-tat tariff war which has been doing great harm to global trade.

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