On April 2nd, the United States announced its latest comprehensive tariffs, igniting economic turmoil worldwide. By this week, most countries have responded cautiously, except for China. China announced extremely tough countermeasures, imposing sanctions on some American companies and immediately raising tariffs on American products to 34% in retaliation.
In response, the U.S. also implemented retaliatory measures. President Trump announced a 125% tariff on China. With this measure in effect, there is a high possibility of a complete interruption in trade and economic relations between the U.S. and China. Why is China taking such a hardline stance? Will the trade and economic relationship between the U.S. and China continue? A trade war between the world’s top two economies could have significant global economic consequences.
Independent TV producer Li Jun stated in the New Tang Dynasty’s “Elite Forum” program that after President Trump announced the tariff measures on April 2nd, the U.S. stock market saw a significant drop the following day. Following China’s retaliatory tariffs on April 4th, the U.S. stock market continued to plunge, with the Dow Jones falling by 5.5%, the S&P 500 by 5.97%, and the Nasdaq by 5.82%. European and Asian stock markets also experienced significant declines, with Japan dropping over 10%, South Korea by 8%-10%, and European stocks by around 10%. However, Chinese A-shares, the Shenzhen stock exchange, and Hong Kong’s stock market only saw minor declines on April 3rd, with A-shares dropping by 0.59% and the Hang Seng Index only falling by 1.52%.
After China’s retaliatory tariffs were implemented, the situation took a dramatic turn on Monday, with the Hong Kong stock market being hit the hardest. The Hong Kong stock market experienced a sharp drop of 13.2% in a single day, shedding over 3200 points, setting a record decline in history. Tech stocks were particularly affected, with the Hang Seng Tech Index plummeting by 17.16%, including Alibaba dropping by 18% and BYD by nearly 16%. Additionally, on the 4th, A-shares and Shenzhen stocks also declined, albeit with a significant reversal.
It appears that the stock markets in China and Hong Kong had a relatively minor reaction to Trump’s tariffs but responded strongly to China’s retaliatory measures, especially in Hong Kong. Thus, some analysts believe the market is highly concerned about the escalation of the U.S.-China trade war. In recent days, the U.S. stock market has started to stabilize, while China has also shown signs of stability due to strong state support.
Li Jun observed that some exporters in China, especially in Guangdong and Zhejiang, mentioned in interviews that trade between China and the U.S. has come to a standstill. Many business owners have halted their activities since they can no longer accept orders from the U.S.
Taiwan macroeconomist Wu Jialong, also on the “Elite Forum” program, expressed his views on the situation. According to him, China’s response is entirely within the expectations of the U.S., as Trump’s actions were premeditated. Trump’s strategy has been clear from the beginning, and the U.S. has a strong grasp on how to handle China in these circumstances.
Wu Jialong further explained that the current tariffs can be described as economic warfare rather than a mere trade dispute. The targeted nature of the tariffs is especially harsh towards China, indicating a full-scale conflict and formal declaration of economic war.
Concerning Taiwan, Wu Jialong suggested that the targeted tariffs aimed at China indirectly benefit Taiwan by preventing military actions against Taiwan in the short term. Trump’s decision to impose a 32% tariff on Taiwan also signifies strategic moves to address specific issues and demands before lowering them after negotiations.
Moreover, Wu Jialong highlighted the potential shift in global manufacturing towards the U.S., indicating that countries like Japan and South Korea may invest in the U.S. due to the lack of shipbuilding capabilities in the country. He also mentioned France’s interest in promoting shipbuilding in the U.S. Wu Jialong emphasized that the current wave of reshoring manufacturing to the U.S. is unprecedented since World War II.
Senior editor Shi Shan and contributor Guo Jun discussed the situation on the “Elite Forum.” They emphasized that the current tariff measures between the U.S. and China have evolved into a strategic issue rather than a purely economic one, indicating a significant rift and declaration of war between the two nations.
They further analyzed the reasons behind China’s strong retaliation against the U.S. Guo Jun pointed out that Xi Jinping’s authority is under scrutiny within the Chinese Communist Party, with internal power struggles possibly leading to his adopting a more aggressive stance. The recent changes in China’s leadership and the shift towards nationalism have influenced Beijing’s response to external pressures.
Guo Jun elaborated on how previous attempts at negotiations between the U.S. and China have faced internal backlash within the Chinese leadership, leading to a reluctance to compromise. As a result, the current circumstances suggest that Beijing is in a precarious position, and any concessions from China would be challenging to make at this point.
The escalating tariffs between the U.S. and China, primarily targeting China, signify a complex political and economic situation that both nations are navigating. The ongoing power struggles within the Chinese government, combined with the economic challenges facing China, have led to a standoff that may have far-reaching consequences for the global economy.
Overall, the discussions on the “Elite Forum” shed light on the multifaceted implications of the U.S.-China trade war and the broader geopolitical implications of the current tariff measures. The analysis presented by various experts on the show provides valuable insights into the evolving dynamics between the world’s two largest economies and the potential ramifications of their trade dispute.