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China vs Trump: how the trade war highlights a culture clash

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US President Donald Trump’s new tariffs on US$200 billion of Chinese imports will come into effect on September 24. In addition, Trump has also threatened more tariffs, on US$267 billion of goods – almost all Chinese imports – if China does not comply with US demands. Meanwhile, US Treasury Secretary Steve Mnuchin has invited his counterparts to attend yet another round of trade talks in Washington, but China’s interest in participating has waned. How do you deal with someone who pats you on the back and steps on your toes at the same time?

Despite this pressure, China is unlikely to succumb to US demands. The typically Chinese response would be to draw out the trade war to gain bargaining power.

The US has the upper hand now. After all, its economy is growing briskly, the stock market is at an all-time high, unemployment at an all-time low and capital investment robust. However, investor sentiment is notoriously fickle and the new tariffs could turn this ebullient mood on its head very quickly.

The 10 per cent tariffs on US$200 billion of new Chinese imports will target about 40 per cent of consumer goods, raising prices for consumers when it hurts most – around the Christmas shopping season.

Businesses will also suffer. According to the American Chambers of Commerce of Beijing and Shanghai, which surveyed hundreds of US companies operating in China, more than 60 per cent of them have been negatively affected by the earlier round of US$50 billion in tariffs and 74 per cent expect “a negative impact” from the new US$200 billion in tariffs. US executives are also taking a wait-and-watch approach to committing to new capital investments.

Watch: Trump threatens tariffs on nearly all Chinese goods

How will Donald Trump’s........

© South China Morning Post