Hello everyone, welcome to “News Discussion” with me, Fuyao. Today is November 15th, Friday.
Our guests for this episode are Dr. Xie Tian, a lecturer at the Moore School of Business at the University of South Carolina, and Qin Peng, a current affairs commentator and senior political and economic analyst.
Today’s focus: Trump’s unwavering trade war 2.0 regardless of party leaders’ opinions, how strong is Lighthizer? Unprecedented possibility of the Chinese yuan depreciating by 50%, Apple iPhones skyrocketing by $300; CATL planning to build a factory in the US, will Trump again escalate tensions with Beijing?
Trump is actively announcing cabinet selections, assembling a group of hawks on China.
This “Dream Team” includes members who may need Senate confirmation, while some can bypass the process and take office directly in January next year after Trump takes office as president.
Insiders revealed that President-elect Trump informed allies that he wants former US Trade Representative Robert Lighthizer to serve as his government’s trade czar. This position could give Lighthizer broad supervisory power over the trade policies of the entire government, including the US Department of Commerce and the Office of the United States Trade Representative.
Lighthizer was a key advisor during Trump’s first term and played a role in implementing tariff policies.
However, speculation is rife that if not for this position, Trump might have considered Lighthizer for Secretary of the Treasury, Secretary of Commerce, or even as the director of the National Economic Council.
Considering this choice, this position, what impact will it have on the US economy in the next four years and beyond? During his campaign, Trump vowed to impose tariffs of 60% or higher on Chinese imports, will he really follow through with this?
Today, we will mainly discuss the challenges that the US and China will face in trade and economics after Trump takes office.
1. Mr. Qin Peng, regarding Lighthizer, our audience may not be familiar with him, could you please introduce him and highlight his major achievements?
2. Dr. Xie, Chinese President Xi Jinping congratulated Trump on his election by saying, “When China and the US coordinate, they will benefit; when they confront each other, both will suffer.” However, it seems Trump is not receptive to this sentiment?
Looking at Trump’s cabinet formation, it is believed that his “Dream Team” consists of hardliners. Hence, many expect that in his second term, Trump will go full throttle against China. Given the recent rumors that Lighthizer will join Trump’s team, do you think this is the case? Can you name other hawkish choices?
3. Mr. Qin Peng, Trump has mentioned imposing a 60% tariff on Chinese goods. Do you both think Trump will proceed with this? If so, when will he act? Within the first hundred days of his term? Two years later?
Furthermore, a research report from the Peterson Institute for International Economics points out that Trump’s current tariff plan could result in an average annual cost increase of $2600 for a typical American household.
If implemented early in his term, will this make Trump’s economic figures look unfavorable, leading to a loss of expectations and trust from the public who hoped he would improve the economy? What impact will this have on the US domestic economy?
Brookings Institution senior researcher and former Chief Economist of the International Institute of Finance, Brooks, reflected on the economic impact of Trump’s first term. He mentioned that when Washington imposed a 25% tariff on half of Chinese imports in 2018, the yuan depreciated by 10% against the dollar.
If a “Trump 2.0” indeed imposes a blanket 60% tariff on all Chinese imports, considering the tariffs in place since 2018, the yuan’s exchange rate against the dollar may need to depreciate by 50% to stabilize US import prices.
4. Dr. Xie, do you estimate that the yuan will undergo such an “unprecedented” depreciation?
Trump has vowed to levy a 60% tariff on Chinese imports, and tariffs ranging from 10% to 20% on products from other overseas regions. Approximately 45% to 50% of the cost of each iPhone 16 is related to imports.
If a 60% tariff is imposed on these imports, each iPhone 16 would face a tax burden of $216 to $240, resulting in an effective tax rate of 27% to 30%. Whether Apple absorbs this cost or passes it on to consumers, it will be detrimental. Around 60% of Americans use iPhones.
During Trump’s first term, Apple was exempt from tariffs on Chinese imports, so its products were not affected. Now, with Trump pledging to increase tariffs on Chinese imports in his second term, Apple may be impacted if it does not continue to enjoy tariff exemptions.
5. Dr. Xie, do you think there will be tariff exemptions under Trump’s new policy 2.0? If not, for companies like Apple, could it severely impact US businesses?
6. Mr. Qin Peng, if a “blanket tariff” leads to price hikes for Apple products, would you still consider using Apple products? Why?
Recently, the US media has also been discussing the issue of Chinese companies building factories in the US.
China’s largest battery manufacturer, the Chinese company CATL’s founder and chairman Zeng Yuqun said that if the elected US president Trump opens the door to Chinese investment in the electric vehicle supply chain, the company will consider building a factory in the US.
Zeng said, “Previously, when we wanted to invest in the US, the US government rejected us.”
CATL’s current operations in the US are limited to battery production licensing deals.
Ford Motor Company is setting up a factory in Michigan to produce low-cost lithium-ion batteries under an agreement with CATL; Tesla also has a similar agreement to produce batteries in Nevada, with the factory scheduled to start operations next year.
Zeng mentioned that Tesla’s licensing agreement allows CEO Musk to focus on artificial intelligence and autonomous driving vehicles.
However, Trump aims to curb the influx of Chinese electric vehicles, but during the August campaign this year, he also expressed openness to Chinese car manufacturers setting up factories in the US to produce cars, which would provide employment for American workers.
7. Dr. Xie, do you think Trump will approve CATL’s plan to build a factory in the US? What considerations might he have? (If approved, how will he address the security risks of individuals’ personal information? If disapproved, how will the US solve its economic challenges?)
8. Mr. Qin Peng, for Chinese battery manufacturers like CATL and electric vehicle makers, what specific harms do they pose to our lives?
There is another significant phenomenon worth discussing.
Renowned China expert Gordon Chang recently stated on Fox News that Beijing is extremely nervous right now. Besides the political and economic issues, many Chinese people prefer Trump.
This is because Trump and the Chinese leader have very different styles, so many Chinese people find such a national leader refreshing. Therefore, apart from the first effect—Trump’s policies targeting the CCP, top Chinese officials are also very worried about another effect—Chinese people’s admiration for Trump.
9. Dr. Xie, will the Chinese people’s appreciation of Trump’s personal charisma make the top Chinese officials so anxious?
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