Washington orders a retreat in the tariff war with China

A trade war between the US and China may not happen. This was the signal sent by US Treasury Secretary Scott Bessent last Tuesday at a closed-door meeting of US investors. According to him, the 145 percent tariffs on Chinese goods by the US and the 125 percent tariffs on American goods by China are not sustainable, and the world's two largest economies must find a way to de-escalate tensions.

President Donald Trump then expressed his belief that he would reach an agreement with his Chinese counterpart Xi Jinping, so that high import tariffs would be significantly reduced, although they would not be zero. According to him, an agreement could be reached very quickly. Bessent is more cautious: tensions in trade relations may decrease in the coming months, but negotiating a broader agreement will take more time. However, Beijing resolutely stated that the US must first remove the tariffs and then it is possible to negotiate.

There is a lot at stake. A trade war between economic giants, whose mutual trade turnover last year amounted to almost $600 billion, could seriously damage the global economy. Moreover, The Washington Post even warned that it increases the risk of armed conflict.

What is leading Washington to retreat? Economic realities. The Chinese economy depends more on exports, but Americans like to buy Chinese goods at low prices. Washington must also take into account that, according to an article by Chinese businessman and blogger Robert Wu in The New York Times, China has been preparing for years for a confrontation with the US by building technological self-sufficiency, rebuilding industry and strengthening domestic consumption.

Chinese tariff retaliation would hurt the US economy. For example, by restricting exports of rare earth metals, where China controls 80 percent of the global market. American arms manufacturers cannot do without them in the production of aircraft, missiles and drones. Boeing is threatened that Chinese airlines will not take delivery of around fifty aircraft ordered this year. And the closure of the Chinese market for American wheat and corn imports would have a big impact on American agricultural states. Latin America can offer a replacement.

Trump thus ordered a "tariff retreat" in mid-April, when he stopped high tariffs on mobile phones and computers. Without it, American technology giants could get into big trouble. After all, Apple, for example, manufactures 80 percent of iPads and more than half of Mac computers in China.

But it doesn't have to be just about high technology. The Financial Times columnist Gideon Rachman wrote that Trump will also back down in the tariff war because of the hot summer and Christmas. China produces 80 percent of the world's ventilators and 75 percent of bicycles and dolls. If they were not on the market, it could harm Trump with the Americans. So it seems that Americans don't have to worry about summer or Christmas.

Although with Trump, no one can be sure that everything will be different tomorrow.

Miloš Balabán, Právo Daily