It appears China has blinked again in the two-year trade standoff with the U.S. The Chinese are cutting tariffs on $75 billion of imports to the U.S., including pork, fish, soybeans, and auto parts. Those Chinese tariffs were implemented last year, at the height of trade tensions between the nations. In January, Washington and Beijing signed off on a "Phase 1" trade agreement, in which the U.S. cancelled planned tariff hikes and China committed to buying more U.S. farm products. In a statement announcing the latest tariff cuts, China's Ministry of Finance says, "We hope to work with the United States toward the final elimination of all tariff increases."
The Phase 1 agreement and subsequent tariff cuts by China are the latest evidence of success in the Trump Administration's tough trade stance on China, despite claims by critics that it would lead to a global trade war and plunge the economy into recession. "The important point about President Trump's trade policies toward China is that he has put the Chinese on notice that the old way of doing things just won't work anymore," says Gordon Chang, author and China expert. "I would have liked to see even more from the Phase 1 trade deal, but nonetheless I think President Trump is moving in generally the right direction with regard to China."
Not only does Chang want to see the U.S. continue to push for more concessions from the Chinese, he believes U.S. companies should reduce their reliance on the Chinese market. "Unfortunately, a number of American companies---especially Apple---are overly dependent on China," he says.
The other big factor right now is the growing coronavirus outbreak across China, which could cut off supply and product lines to the U.S. and put even more pressure on the Chinese economy. That could place the U.S. in an advantageous position for "Phase 2" trade talks. Chang wants the U.S. to stay strong. "China has been stealing U.S. intellectual property to the tune of hundreds of billions of dollars a year, and been engaging in increasingly predatory trade policies," he says. "Our president put them on notice that those days are over."