China and the USA are heading for a new trade dispute – with considerable consequences for the global economy. Are the EU now facing more cheap imports from China?
The answer from Beijing followed promptly. Just a few minutes after the additional tariffs of ten percent arranged by US President Donald Trump to all Chinese imports to the United States, the People’s Republic reacted with counter-tariffs to coal, liquefied natural gas, oil and agricultural machines from the USA.
The next stage in the USA -China trade conflict is ushered in – a reason for worrying? “China’s reaction appears relatively moderate,” explains Commerzbank economist Bernd Weidensteiner in conversation with Evidence Network.de. “In total, the affected goods volume should amount to just $ 10 billion – a maximum of a tenth of the import volume from the USA.”
China is not Mexico
Trump had already announced yesterday that the Chinese side would probably speak “in the next 24 hours”. However, if you hope for a quick agreement and the suspension of tariffs based on the model of Mexico and Canada, you should be deceived.
“At Mexico, Trump had a completely different basis for negotiations, the country is much more dependent on the United States,” emphasizes Economist Weidensteiner. “China shouldn’t buckle so quickly.”
According to forecasts by the Munich IFO Institute, China is likely to cope with a “trade war” with the United States significantly better than the US neighbor Kanada and Mexico. Chinese export should only decrease by 3.8 percent, according to the researchers. Canada, on the other hand, would have to expect a minus of its total exports of 28 percent, Mexico even 35 percent.
“Beijing doesn’t want to cut a tablecloth”
But Beijing is also not interested in an escalating trade conflict with the world’s largest economy. “Beijing does not want to cut the tablecloth,” Commerzbank expert Weidensteiner is convinced. China wants to keep all options open to negotiate with Trump as face to face as eight years ago.
In the end, both parties had agreed on the “Phase One Deal”: As part of the agreement signed by the USA and China on January 15, 2020, China said the purchase of additional US products worth $ 200 billion in the next two years to. Overall, the import volume of the products mentioned in the deal in 2020 should amount to $ 159 billion; In 2021 it should be $ 193 billion.
The trade agreement in January 2020 provides for the import of additional US products (based on the import values of 2017) worth $ 200 billion to China for the period in early 2020 to the end of 2021. The quantities have also been prescribed exactly, as an additional industrial goods should be imported over $ 77.8 billion – an increase of 116 percent compared to 2017. The import volume of energy (LNG, crude oil and refinery products) should increase by $ 52.4 billion ( Plus 750 percent), from agricultural products by $ 32 billion (plus § 150 percent) and of services such as tourism $ 37.9 billion (plus 70 percent).
“Phase One deal” was a letdown
But the “Phase One Deal” failed spectacular in its first year. With a volume of a total of $ 94 instead of $ 159 billion, the export of phase-one products from the USA to China remained behind the target by more than 40 percent, the Peterson Institute for International Economics.
The independent US thinking factory therefore also describes the phase-one deal as a “flop”-and with this opinion is not alone among economists. China was never able to fulfill the deals of the deal, although the economic devastation by the Corona pandemic was only partially responsible for this.
“Sand in the gearbox of world trade”
“The fact that China could not keep the phase-one deal was also due to the weaker inland demand,” explains Weidensteiner. “Only Trump should hardly accept it as an excuse.”
The economist fears serious consequences for the global economy if the game of tariffs and counter -tariffs between the USA and China now start. “The renewed conflict of trade US-China throws sand into the gearbox of world trade, the inflation is likely to rise, even in the western countries. If there is a customs escalation spiral, this would push growth worldwide.”
Top against Chinese e-commerce
But that’s not all: the economies in the EU could be one of the victims of an escalating trade conflict between the USA and China. “If the US market is completely closed to Chinese goods, they should end up in Europe more,” warns Weidensteiner. “Then the EU Commission would have to take measures against China.”
Above all, the export of cheap goods from China could increase drastically. Because Trump’s tariffs against China contain a tip that is specifically directed against the expanding Chinese e-commerce. In addition to the ten-percent special tariffs on Chinese goods, the so-called “de-minimis” excavation regulation is now also eliminated.
So far, this has previously proven that no tariffs with a value of less than $ 800 were required – a gateway for China’s online retailers who often send cheaper goods directly to consumers in the USA.
Temu and Shein: pressure on the EU rises
According to estimates by the US customs and border protection authority, American buyers and companies imported shipments from all over the world worth around $ 48 billion in the first nine months of last year. The abolition of the “De-Minimis” excavation can be made directly by Chinese corporations such as Alibaba, Temu and Shein.
In search of customers, they could flood the markets away from the United States with their goods – especially the EU countries, in which a duty -free limit of 150 euros still applies. The EU plans to abolish this duty -free limit to January 1, 2028 – but now the pressure could also increase in Brussels to act a little faster.
