China trying to 'outlast' Trump's trade war, pressure US allies to 'hedge'

Washington: China seeks to "outlast" an escalating trade war with the United States and keep pressure on U.S. allies to "hedge," a former US diplomat said, as President Donald Trump's imposition of new tariffs and Beijing's retaliation have sharply raised tensions between the two superpowers. Daniel Russel, former assistant secretary of state for East Asian and Pacific affairs and vice president of international security and diplomacy at the Asia Society Policy Institute (ASPI), made the remarks, after the U.S. raised tariffs on China to 145 percent, with China increasing tariffs on U.S. goods to 125 percent, reports Yonhap news agency.

Following its tariff hike, China stated a decision to "ignore it" if the U.S. continues to impose tariffs on Chinese goods on the grounds that given the current duty level, there is no market acceptance for American exports to China. "By declaring it will 'ignore' future U.S. tariff hikes, Beijing is not trying to win the trade war -- it's trying to outlast it and to outmaneuver Trump," Russel said in a statement. "Beijing's goals are to buffer its economy, expand diplomatic clout, and keep pressure on U.S. allies to hedge." He was apparently referring to a scenario in which U.S. allies might seek to strengthen trade ties with China or diversify trade routes in the wake of Trump's tariff imposition. Russel pointed out that Chinese President Xi Jinping's upcoming trip to Vietnam, Malaysia and Cambodia is "part of a strategy to shore up China's economic ties in the region while Washington lashes out and alienates its partners." Wendy Cutler, ASPI vice president and managing director and former negotiator of the South Korea-U.S. free trade agreement, assessed that China is "in for the long haul." "Beijing has also admitted that it has reached the end point in retaliating with tariffs, perhaps signalling that it has lots of other tools in its arsenal that could be activated further should the U.S. respond today with additional measures," she said in a statement. "The steep tariffs now in place -- 145 percent for Chinese imports to the U.S. and 125 percent for U.S. imports to China -- virtually halt all goods trade between the two largest economies in the world."

She added that how long these tariffs remain in place is an open question, but at some point both Washington and Beijing will recognise the need to reengage and manage the deteriorating situation. Meanwhile, The Wall Street Journal reported that the Trump administration has started an endeavor to negotiate "ad hoc" deals with more than 70 countries over tariffs, with any agreements likely to fall short of full-fledged trade agreements. Citing Sen. Bill Hagerty, ambassador to Japan during Trump's first term, the newspaper said that the Trump administration might settle for written commitments from foreign trading partners to make certain economic reforms.