Slapped with tariffs, some US trade partners lean toward Beijing
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Ned Temko Columnist
| London
So much is changing, so jarringly, in America’s relations with China that it’s easy to overlook another equally dramatic diplomatic shift that could well decide how and when their tariff war ends.
It involves relations not with America’s main rival power, but with its friends.
For years, even during President Donald Trump’s first term, U.S. strategy toward Beijing has been built on a constellation of like-minded countries making common cause against China’s unfair trade practices and its growing economic, political, and military assertiveness abroad.
Why We Wrote This
Once, America could have counted on its allies to help pressure China over its trade practices. But facing U.S. tariffs themselves, those friends now feel scorned and more open to Chinese overtures.
But today, many, if not most, of those friends – alarmed by the superpower showdown – are feeling unloved, unappreciated, even scorned by the United States.
The immediate reason: Only days before Mr. Trump hiked tariffs on China, he had slapped tariffs on them as well. He accused them, like Beijing, of “ripping off” America.
Though those tariffs have been put on “pause” as he focuses on China, the message has hit hard. “This is not the act of a friend” was the response of Australian Prime Minister Anthony Albanese to the tariffs imposed on his and other U.S.-allied countries.
For Mr. Trump’s tariffs to have maximum clout, Washington will want to make sure that China cannot cushion their effect by trading more with other countries.
Fortunately for Washington, America’s allies and trading partners have reasons of their own to be wary of a suddenly tighter embrace with Beijing.
As the world’s second-largest economy, China already does hundreds of billions of dollars of trade with these countries. They include Australia, Japan, and South Korea in the Asia-Pacific region, as well as Britain and the 27-nation European Union.
The EU, in particular, is worried that China might be tempted to engage in cut-price “dumping” of its exports that cannot find a market in America because tariffs make them too expensive there.
But Beijing could make a case for a longer-term expansion of trade that European and Asian partners might find compelling, especially if there is no early end to the U.S.-China standoff.
China could pledge not to engage in dumping, or possibly even respond to a long-standing European complaint by opening up its vast domestic market.
Whether that will happen, it is too early to say.
Yet since Mr. Trump’s tariff announcements, China has signaled a keen awareness of the growing tension between Washington and its allies.
It has sought to flip the script on perceptions of international trade, portraying itself as the guardian of stable free trade and painting Mr. Trump as a rogue and a bully.
Chinese leader Xi Jinping this week visited two of the Asian countries at the top of Mr. Trump’s tariff chart, Vietnam and Cambodia.
Both have become increasingly important sources of American imports in the past few years. U.S. and Chinese businesses have been relocating there from China, so as to avoid the risk of tariffs and tensions between the superpowers.
Vietnam and Cambodia are both anxious not to jeopardize their access to the U.S. market, which now accounts for large chunks of their export-driven economies.
Yet if the new tariffs on their U.S. exports are not eased by the time the three-month pause ends, they could take a major hit. Vietnam’s exports to America represented 30% of its gross domestic product last year.
And in a signed newspaper piece coinciding with his visit to Hanoi, Mr. Xi pointedly offered an alternative solution, declaring that “China’s mega market is always open to Vietnam.”
Chinese Premier Li Qiang and the EU’s top executive, Ursula von der Leyen, also spoke after the U.S. tariff announcements.
While the EU account of their conversation was more cautiously worded than China’s, the discussions did yield a practical result: a resumption of stalled talks on the sale of cheaper Chinese electric vehicles in European countries.
The EU also confirmed that a high-level delegation would be heading to Beijing in July for talks with Mr. Xi and other senior Chinese figures.
Britain also seems inclined to reset trade relations with China. That’s despite a dispute this week with a Chinese company intent on shutting down the blast furnaces at a United Kingdom steelmaking plant that it owns – a move the British government intervened to halt.
Business Minister Jonathan Reynolds is reportedly set to visit China in the near future, and will be reviving the two countries’ joint Economic and Trade Commission. The forum has been idle for the past six years amid tensions over issues such as the human rights crackdown in Hong Kong.
None of America’s allies is about to turn away from Washington outright.
Britain, which had been working with U.S. officials on a free trade agreement when Mr. Trump announced his tariffs, still hopes to get a deal done before they kick back in.
The allies’ immediate concern is to insulate their economies from the effects of President Trump’s tariffs. In years past, they would have expected to have been in close contact with Washington over trade policy.
But times have changed.
Now, when the phone rings, the call is more likely to be from Beijing.
