As the U.S. administration has taken an increasingly hawkish turn on China, economists agree that the U.S. high tariffs plan on Chinese imports will backfire.
"U.S. consumers will bear the costs of the Trump administration's tariffs on Chinese imports," said Justin Yifu Lin, dean of the Institute for New Structural Economics of Peking University, in a written article.
As U.S. consumer demand for daily necessities will not change simply by raising the costs of imported products, the United States will either continue to import from China or it will import from Vietnam, India and Africa where goods prices are higher, and the result will be the same: the U.S. consumers would pay more for the same products, Lin explains.
Thus, "the politically motivated imposition of high U.S. tariffs on imports from China would fly in the face of reciprocity, contradict the win-win principle of trade, and jeopardize the interests of U.S. voters," said Lin.
Last Thursday, U.S. President Donald Trump signed a memorandum that could impose tariffs on up to 60 billion U.S. dollars of imports from China and restrictions on Chinese investment in the United States.
In response to the U.S. tariff proposals, China's Ministry of Commerce announced last week that it was considering suspending tariff concessions on 128 categories of U.S. products worth 3 billion dollars, including pork, wine and seamless steel tubes.
"Whereas the U.S. imports tens of thousands of Chinese products, China imports a narrow range of products from the U.S., such as soybeans, corn, computer chips, and aircraft. China's imposition of higher tariffs on imports from the U.S. would thus have a bigger impact on U.S. producers than vice versa," Lin said.
Zhu Min, head of the National Institute of Financial Research at Tsinghua University, echoed, noting that a trade war between China and the U.S. will have potential repercussions on the global industrial chain and let the U.S. enterprises and consumers shoulder higher prices.
Once a trade war starts, the cost, price and flow of commodities will all change, affecting an estimated 400 billion dollars or more of the global industrial chain, according to Zhu.
"Now, with the U.S. abandoning free trade, China can take up the mantle of promoting it, thereby improving its image as a major power and demonstrating its commitment to global governance and development," Lin said.
