Peter Lewis: Asia business correspondent on how China has been preparing for Donald Trump's tariffs

China has been preparing for Donald Trump’s threat of tariffs.

The US President-elect is pledging to add another 10 percent on top of existing tariffs on Chinese exports, where he also slapped tariffs on Mexico and Canada.

In a post on Truth Social, Trump has made more about curtailing the supply of drugs and reducing illegal immigration. 

But Asia business correspondent Peter Lewis told Heather du Plessis-Allan it’s hard to know what China can really do about that.

He says economists predict the tariffs will reduce exports by about 15 percent, knocking off about 0.5 percent of China’s GDP.

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Episode Transcript

Speaker 1 (00:00):
Hither dup se La Peter Lewis Asia Business correspondence with
US Now Hi, Peter, Good evening, Heather. Are we taking
this threat of tariffs from Donald Trump seriously? Yes, China
certainly is. He's threatening to add another ten percent on
top of any existing tariffs on Chinese goods. This was

(00:20):
part of his announcements the other day where he also
slapped his talking about slapping tariffs on Canada and Mexico.
It could be a negotiating tactic, for sure, but also
it could be exactly what he intends to do on
day one. He has the authority to do it. He
can just sign an executive order and it could be
a warning about what might happen on the first day.

(00:42):
What is interesting about this, and also unusual compared to
his first term, is that when he put tariffs on
Chinese goods the first time around, it was all about
two things. It's about reducing China's trade surplus with the
US and it was about protecting American jobs. Well, this time,
in his post on Truth Social he mentioned nothing at

(01:03):
all about the trade deficit with China or jobs. This
is about two different things. Now, it's about curtailing the
supply of drugs, and it's also about reducing illegal immigration,
where it's hard to know what China can do about them.
Certainly certainly can't do anything about illegal immigration into the US.

(01:25):
And on the drugs problem, the fentanyl problem, this has
really been one of the successes that the Biden administration
has had with China. They have cooperated on this for
quite a while now and have had success in reducing
the supply of that. So it's very hard to know
what China can do, but it will carry on when

(01:46):
it has been doing so far, which is that it's
preparing for the arrival of Trump. It's presuming that there
are going to be tariffs, that they will have an
economic impact. I mean, economists reckon that's ten percent. Tariffs
will reduce exports from China to the un US by
about fifteen percent, and that will knock about half a
percent off of GDP. China's preparing for that. It's looking

(02:07):
for new markets, new export markets. President Jiging Ping was
in Latin America just recently building up trade relationships with
countries around there. So I think, you know, we're already
seeing what their response is going to be to this.
How big is the drug trade from China going over
the American border. Well, this is the thing. I mean,
no one's quite sure. I mean that Donald Trump reckons

(02:30):
that a lot of it comes from China, and that
he has said in the past that China does it
deliberately to try and destabilize the United States. Now I
doubt that that is true. But fentanyl comes not just
from China, I mean Mexico. You know, probably the biggest supply.
It comes from just over the Suthern border in Mexico

(02:51):
rather than China. But nevertheless, I mean, gigen Ping has
been cooperative on this, and he has bordered officials to
work with a bien administry to try and make sure
that they stop any flow of this from from China.
Going on to going on to the US, Peter listen,
I see China's industrial profits have dropped by ten percent.
How stressed out are people about this? Well, it's I mean,

(03:15):
on the one hand, it's not bad news because the
previous month it was down about twenty seven percent, So
it is a slowdown from the previous month. When it
shows is that China's economy is still struggling. And you
know these what this measures is basically the profits of
the big manufacturing mining firms in China. They are struggling

(03:37):
to make money despite the increase in exports, partly because
of deflation. Prices are going down, so that's hurting their earnings.
And also the slump in the property markets is still
ongoing and a lot of the profits from industrial companies
come from supplying products to China's property sector, and that's

(04:00):
been in a slum for about four years now and
shows no sign of recovery. So this really shows that
despite all the stimulus that we've seen in the last
two or three months from the Chinese authorities, it is
really struggling to get through and make a big difference
to China's China's economy. Peter, thank you for running us through.
We're going to talk to you next week. Look after Yourself.

(04:21):
That's Peter Lewis, our Asia business correspondent based out of
Hong Kong. For more from Hither Duplessy Alan Drive, listen
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