It all began with Trump’s tariffs on steel and aluminum. Red China responded with tariffs on about $3 billion of American exports. Trump upped the ante with a proposal for tariffs on $50 billion in Chinese imports. Red China responded in kind, including tariffs on American soybeans, and they promptly began buying their soybeans from Brazil. No dummies, the Brazilians. They raised their prices. And the EU, now unable to buy from Brazil, placed big orders for American soybeans. No skin off the noses of American soybean farmers.
Trump then responded with a proposal for tariffs on another $100 billion of imports from Red China, whose tit-for-tat strategy was now exhausted since they import so little from the U.S. Instead, they threatened severe retaliation in some form that remains unspecified. But their rhetoric was threatening. Not Islamist “rivers of blood running through your cities” threatening, but scary enough to those who don’t really understand international trade.
Now it’s looking a whole lot like a bluff. As reported in the above-linked article, the Chinese are now running scared, trying to drum up support for “free trade” (their version of it) with the EU (European Union).
Some of the western diplomats involved in the meetings with Fu Ziying, who is also a vice-commerce minister, have viewed the approaches as a sign of how anxious Beijing is getting about the expanding conflict with Washington, the sources said.
The rush of meetings last Thursday and Friday with ambassadors from France, Germany, the United Kingdom, Spain, Italy, and the European Union, may be a signal that China is trying to build a firewall against Trump’s aggressive trade measures, the severity of which some foreign diplomats said Beijing had miscalculated.
“China is showing confidence, but internally they appear quite concerned. They have apparently underestimated Trump’s resolve on trade,” the diplomat said, adding that Beijing is nervous about China’s major trading partners siding with Washington.
It’s not likely they’re getting much sympathy from the EU. In 2016, the EU had a $175 billion trade deficit with Red China. If anything, the EU is probably realizing that America’s new get tough policy has Red China running scared and, just maybe, they ought to try a little of that tariff medicine themselves.