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【Text/Observer Network Yang Rong】

The bullet that "pierced" the auricle gave a boost to the election campaign of former US President and 2024 Republican presidential candidate Trump, and his isolationist and protectionist trade policies have once again attracted widespread attention. On July 17, the Hong Kong English media South China Morning Post quoted a number of experts and analysts as saying that if Trump returns to the White House, China may face a "tariff tsunami", but China's mentality is "completely different" compared to a few years ago, and the domestic political and business circles are almost "fully prepared" to deal with the worst case scenario.

Trump was "attempted to assassinate" at a campaign rally in the swing state of Pennsylvania last Saturday (13th). Reports said that although the ultimate impact of the "assassination" remains to be seen, the attack seems to have made the situation more favorable to him in the short term. The Republican Party struck while the iron was hot and formally nominated Trump as the presidential candidate at the National Convention held the next day. The latter announced that he had chosen Ohio Senator James Vance as his running mate.

Trump has declared more than once during this year's campaign that he will impose tariffs of more than 60% on all Chinese imports. Chen Fengying, former director and researcher of the Institute of World Economics at the China Institutes of Contemporary International Relations, believes that "another trade war" between China and the United States seems inevitable. However, the report analyzed that China has made "full preparations" for this.

The South China Morning Post stated that in 2018, when Trump announced the first batch of tariffs of up to 25% on China, China experienced an initial "panic" and then began to reorganize its global trade model by exploring emerging markets such as the Middle East and Central Asia, while working to accelerate the construction of a new development pattern with "domestic circulation as the main body". "It seems that we have gradually adapted, and we have been digesting tariffs through supply chain migration - there is no other way." Chen Fengying said, "In other words, China's mentality is completely different (now)."

Nick Marro, chief economist for Asia at the UK-based Economist Intelligence Unit (EIU), worries that Trump's second term will be "even scarier" because he will have a clearer idea of ​​what he can and cannot do - specifically, how to circumvent various restrictions to achieve his "wishes."

"Trump's approach (in his first term) is largely to test the limits of his power and position, while also trying to see to what extent he can impact U.S.-China trade and diplomatic relations." Marro believes that if Trump is elected, one way he could impose higher tariffs is to cancel China's permanent normal trade relations (PNTR) status with the United States.

However, the report also quoted several analysts as saying that no matter how much Trump's "promise" helps boost his election prospects, the feasibility of the US government imposing such high tariffs on Chinese goods is still uncertain because it may trigger another surge in the already high inflation rate in the United States, placing a heavy burden on American consumers.

"Many U.S. manufacturers lack global competitiveness and rely on key intermediate inputs and capital goods sourced from abroad, including China." Marro said the lack of direct substitutes for these goods at least poses the risk of soaring production costs, and even if costs fall in the coming years, they are likely to stabilize at some equilibrium point above the pre-tariff average.

A report commissioned by the U.S.-China Business Council and conducted by the Oxford Economics in November 2023 showed that terminating permanent normal trade relations with China would cause the United States economic losses of approximately $1.6 trillion and cause the loss of more than 700,000 jobs.

"Tariffs on China: Trump is stupid, Biden is stupider", John Feffer, director of the US Foreign Policy Focus Research Program, recently wrote an article with this title, saying that for ordinary American citizens, tariffs will mean higher prices not only for Chinese products, but also for any products that rely on Chinese raw materials. Farmers will find it more difficult to sell soybeans and corn to China. Manufacturers will have to pay more for high-performance components such as batteries.

Lu Xiang, an expert on American studies at the Chinese Academy of Social Sciences, believes that if the United States really imposes a 60% tariff on all Chinese products, it will mean a "complete decoupling" of Sino-US relations, which is actually not conducive to Trump's governance.

"When there is still room for negotiation on tariffs, China will still care about bilateral relations. But if the trade relationship breaks down completely and interdependence is zero, China will no longer care about the United States. This is also the most unstable situation (for Trump)," said Lu Xiang.

Ding Shuang, chief economist for Greater China at Standard Chartered Bank, predicts that Trump may announce a 60% tariff after his election, but this stance is more likely to be to gain an advantage in further negotiations with China. The report mentioned that China and the United States are the main importers and exporters of energy respectively, and China has been selling U.S. Treasury bonds recently. Ding Shuang believes that China and the United States may find room for compromise in areas such as energy and U.S. Treasury bonds.

Ding Shuang said that if Trump "wins", in the short term, China's exports may be boosted because US importers may ask for concentrated shipments before tariffs take effect and accumulate inventory, but this also means that the trend of industrial chain relocation will continue. Considering that Trump supports Chinese companies to build factories and employ local workers in the United States, rather than drastically cut investment ties like his opponent Biden, the direction of Chinese companies' overseas investment may shift from Southeast Asia, Mexico and other places.

However, the report warned that since protectionist policies have become a consensus between the Democratic and Republican parties in the United States, even if Trump does not return to power, the prospects for Sino-US relations are unlikely to brighten soon. On the other hand, Lu Xiang pointed out that although Trump has a pragmatic side and does not care much about ideology, this only means that he himself will not necessarily make Sino-US relations tense, and the Republican Party's overall more hawkish stance on China is difficult to change.

As a vice presidential candidate, Vance used to describe Trump as "disgusting", but now he is highly consistent with him on many issues, claiming that even if the cost is a decline in GDP, more support should be given to the revitalization of the US domestic manufacturing industry to deal with China. Jamie Dimon, CEO of JPMorgan Chase, who is considered to be one of the potential new Treasury Secretary candidates, has also recently begun to praise some of Trump's positions and policies, saying that the latter's "trade tax reform has worked, and some of his views on China are correct." Some media pointed out that Dimon has always had a negative evaluation of Trump in the past.

In addition, the South China Morning Post also said that although Trump was "louder" in proposing tough measures against China, the Biden administration, which is considered "quieter", is also maintaining the original 301 tariffs on China during the Trump era. It has further imposed tariffs on Chinese products imported from China, including electric vehicles, lithium batteries, photovoltaic cells, key minerals, etc., involving about US$18 billion, and has strengthened restrictions on Chinese trade and technology through the "small yard and high wall" strategy.

"Sometimes, a silent dog bites harder," said Chen Fengying.

Of course, until the dust settles, no one knows what Trump's priorities will be when he really starts his second term. According to Vance, Trump should negotiate with Russia and Ukraine after taking office to end the Russia-Ukraine conflict as soon as possible so that he can focus on dealing with China, the so-called "biggest threat to the United States." Trump himself has repeatedly boasted that he can end the Ukrainian crisis within 24 hours, but he has not received an enthusiastic response from Russia and Ukraine.

The Washington Post reported in April that a person who had discussed the matter directly with Trump said that Trump had privately stated that he believed that both Russia and Ukraine "wanted face and wanted a step," and that people in some parts of Ukraine would agree to become part of Russia. Therefore, he proposed pushing Ukraine to "cede" the Crimea and Donbas border areas to Russia, etc., to end the conflict.

Ukrainian President Zelensky responded in an interview with British media in January that Trump's statement "made him feel uneasy." Russian Foreign Minister Lavrov also said at the time that Trump's promise to "quickly end the Russian-Ukrainian conflict" was almost unrealistic, and said that Ukraine did not seem ready to accept any form of solution.

Lavrov also pointed out that Trump's return to the White House is unlikely to reverse the downward trend in Russian-US relations, because Washington has destroyed all mechanisms for building trust and is still too obsessed with its perceived "sense of self-superiority" and "sense of impunity" to change its views on Russia.

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