(May 4): Amid disrupted global supply chains and trade patterns, US President Donald Trump said the “tariff” word while making remarks about China.
His rhetoric follows frustrations over the outbreak of the novel coronavirus, which he claims to have seen evidence indicating its origins from the Wuhan Institute of Virology. “We’re going to see where it comes from,” Trump said at a White House event on April 30.
“We have people looking at it very, very strongly. Scientific people, intelligence people and others. We’re going to put it all together. I think we will have a good answer eventually and China might even tell us”.
In response to queries of the evidence seen, Trump responded, “I can’t tell you that. I’m not allowed to tell you that”.
Interestingly, Trump’s comments come just after the US’ Office of the Director of National Intelligence issued a statement stating that it “concurs with the wide scientific consensus that the Covid-19 virus was not manmade or genetically modified”.
“The intelligence community will continue to rigorously examine emerging information and intelligence to determine whether the outbreak began through contact with infected animals or if it was the result of an accident at a laboratory in Wuhan,” the statement added.
With this in mind, Trump is now shifting his focus towards China’s role in the origin and spread of the coronavirus, instead of working on the Phase One trade deal signed on January 20.
“We signed a trade deal where they’re (meaning China) supposed to buy and they’ve been buying a lot actually. But that now becomes secondary to what took place with the virus,” Trump told reporters. “The virus situation is not acceptable”.
The Jan 20 deal saw the US cutting some tariffs on Chinese goods in exchange for China’s agreement to purchase more American farm, energy and manufactured goods. Beijing had also agreed to address the US’ complaints about its intellectual property practices.
At present, tariffs of approximately 25% remain on some US$370 billion ($524.0 billion) of Chinese exports to the US. These tariffs were up for discussion at Phase Two of the trade talks between the superpowers, which has yet to be scheduled.
Aside from tariffs, there are reports showing that the US may use other tools to “punish” China. This includes cancelling US debt owed to Beijing. According to data from the US Treasury Department, China presently owns US$1.1 trillion worth of US Treasuries.
So far, Trump has not explicitly indicated that he will go to such lengths. "I can do it differently. I can do the same thing, but even for more money, just by putting on tariffs. So, I don't have to do that," he told Reuters.
Such a move constitutes a default on US debt and would be highly destabilizing, analysts observe. This could result in ratings firms downgrading the US’ credit rating, undermining the notion that US Treasuries are safe-haven investments.
Analysts at consulting firm Eurasia Group say “collecting repatriations through China’s holdings would undermine financial markets and be legally questionable”. As such they consider such a move “extremely unlikely”.
For now, Trump has maintained that the imposition of another round of tariffs on Chinese goods remains the “ultimate punishment”, much to economists’ concerns that it would bring more harm to the already ailing US economy.
