Not all aces in Trump house of cards

Editorial | Mary Ma 12 Jul 2018

US President Donald Trump has shown what's perhaps the most significant card in his trade war with China, ramping up tariffs on an additional US$200 billion (HK$1.56 trillion) worth of Chinese goods.

Before long, he will probably move to double down, making it US$400 billion. But will he raise the ante to affect all Chinese imports, which stood at US$500 billion in 2017? It wouldn't surprise me one little bit if he does.

When a figure reaches such an astronomical level, it makes no difference psychologically or politically whether it's US$400 billion or US$500 billion.

However, for an egocentric who doesn't have the good graces to face up to his mistakes, Trump may do anything to secure a face-saving "victory," although such a victory doesn't exist. The concern is what else will he do when the war results in a stalemate after all his cards are used up. That's where the danger lies.

So far, the White House has timed each step it has made with a purpose. First, it targeted Chinese tech firm ZTE to test Beijing, which conceded that round hoping that the about-face was one-off. As for Trump and hawks in his inner circle, it was a total triumph to clear the way for further advances.

Then, the battalion of tariffs on US$50 billion worth of Chinese goods rumbled ahead, leading to a direct clash as Beijing responded with tit-for-tat retaliation.

In launching the third wave of attacks on another US$200 billion worth, trade representative Robert Lighthizer offered a rather ludicrous justification, saying they had given Trump's "good friend" President Xi Jinping a year's notice.

That couldn't be more hypocritical. Hadn't talks during the past year produced a statement of truce announced by US Secretary of Treasury Steven Mnuchin? It was ditched only after it failed to meet the needs of Trump's personal political agenda.

To fortify its defense lines, Beijing is doing everything possible to build an alliance with Europe and the Arabian world - even agreeing to allow Liu Xia, the widow of Nobel Peace Prize winner Liu Xiaobo, to fly to Germany as a goodwill gesture aimed at cozying up to Berlin. But it's questionable whether the small gesture will mean anything materially to Beijing's ongoing fight with Washington.

The latest round of tariff escalation will certainly come into force after the so-called public comment period ends in August. When the 10-percent tariffs are slapped on US$200 billion of Chinese goods, there will only be two months to go before the November US mid-term elections.

It's probable Trump will continue to intensify the trade war during the period to drum up nationalism at home.

Meanwhile, it's curious Trump couldn't hold off playing his ace in the hole at this stage, for this card will surely alienate him from the business community too. Maybe he's no longer as confident of a total victory as before.

As a pundit once said, bigger bets mean higher risks.

A month after the mid-term elections will be Christmas. Will Americans be upset after they find they can't fill their shopping bags with the money in hand?

The winds aren't blowing entirely in Trump's favor.

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