Despite the hype, the signing of the Phase One deal has only seen US President Donald Trump escalate the trade war – and the worst is yet to come.
With the signing of the Phase One trade deal on 15 January, the trade dispute that rocked world markets appeared to be on the backburner. But Washington has used its (perceived) success to kickstart another stage in its forever war.
This new stage has seen laws passed that would allow Washington to impose tariffs on countries that intentionally devalue their currency – something it has already accused China of doing. And while it’s difficult to actually determine whether another country is intentionally devaluing their currency due to the market fluctuations that most currencies are subject to, it’s unlikely that this new weapon will be deployed as part of any clear-minded, evidence-based strategy.
On 13 February, the Department of Justice also drastically escalated its skirmish with Chinese telecom Huawei, charging it with racketeering and conspiracy to steal state secrets, and accusing a subsidiary – Skycom – of assisting Iran with domestic surveillance.
At the same time, the Department of Justice has also issued a warrant for the arrest of four PLA soldiers it said were responsible for the 2017 Equifax breach that resulted in the theft of millions of Americans’ social security numbers, and accused China of being involved in 80 per cent of its economic espionage prosecutions. While that’s a fair enough accusation, it’s not the sort of subtle political manoeuvring required for a comprehensive trade deal, and it hasn’t been well received in China.
“It shows that some high-level officials not only want to build a consensus inside the government that China is a threat, they also want to walk ordinary people into believing this,” Li Haidong, a professor at the China Foreign Affairs University in Beijing told The Global Times, China’s state-run media.
“Thus we can predict that the US government will launch a series of hardline policies in an intensive manner in the near future, eventually propelling the US government's competition strategy against China as a sustainable strategy agreed on by bipartisan and cross-social spheres.”
China is currently ill-equipped to deal with any further escalation in the dispute. Even before the outbreak of COVID-19, it was unclear whether the country would meet its Phase One obligation to purchase some $200 billion of American manufactured and agricultural goods. It’s now highly unlikely – and if China doesn’t renegotiate the deal it will likely wind up on the wrong end of further punitive tariffs.
Meanwhile, Mr Trump will take the trade war to the polls in November. The President can’t be seen to be resting on his laurels despite strong employment data and growth. Accusations of economic espionage will support Washington’s mandate to proceed with further action against China – and now that it’s re-armed, the US looks set to ramp things up.
Former CEO of ING Direct Vaughn Richtor will assume the role of chairman at MyState following the retirement of Miles Hampton, the compan...