Peter Lewis: Asia Business Correspondent on Donald Trump reportedly considering slashing tariffs on China

New reports indicate Donald Trump is considering slashing tariffs on Chinese goods by more than half.

No announcements have been made yet- but tariffs could reportedly come down to between roughly 50 percent and 65 percent, according to one senior White House official. 

Asia Business Correspondent Peter Lewis says China has signalled it's open to trade talks - as officials believe this is the US blinking first in the trade dispute.

"They see it as vindication of President Xi's strategy - which is to hang tough and not to be bullied and not to negotiate under duress."

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Episode Transcript

Speaker 1 (00:00):
Now, the Wall Street Journal is reporting that Donald Trump
is considering slashing tariffs on Chinese goods by more than half. Now.
No decisions have been made just yet, reportedly, but that
would mean that tariffs could come down to between fifty
and sixty five percent. China, on the other hand, has
signal it's open to trade talks but won't negotiate under
juris now. Peter Lewis is our Asia business correspondent with
US Now have Peter.

Speaker 2 (00:21):
Good Evening, Heather, it.

Speaker 1 (00:23):
Doesn't I mean, nothing is set in stone just yet,
but it feels like things are calming down.

Speaker 2 (00:27):
Yet they are calming down, but I think from China's perspective,
the way they're presenting this, particularly that Wall Street Journal
reports which suggested taroft's on China could be halved, they
say it as Trump blinking first and it being a
vindication of presidency's strategy, which is to hang tough there

(00:49):
as you said earlier, not to be bullied, and not
to negotiate under dus now. Scott Besson's, the US Treasury Secretary,
yesterday said that Trump hasn't offer to just remove tariffs
on his own. There has to be a mutual The
escalation and tariff's sort of come off together. Well, China
has made it very clear that that isn't going to happen,

(01:12):
and it does appear that the White House is misreading
the room. Again here, China's view has been very much,
you put these tariffs on. We didn't ask for this,
we didn't start this trade war. Therefore, you are going
to have to take them off, and once you do that,
we are then open to negotiations. But this idea that
there's going to be some mutual reduction in tariffs over

(01:36):
time is not what China has been saying. And furthermore,
they sort of see it as a sign that this
is an administration in the US that is in some disarray.
It doesn't have a trade or economic policy. You have
taris put on one day, then suspended the next, then exemptions,
a whole bewildering array of exemptions announced. This is very

(01:57):
much giving the impression to China that there isn't a
coherent trade policy or strategy. It's being made up as
they go along on the whim of one man in
the White House.

Speaker 1 (02:08):
What is China prepared to give, Well, it's.

Speaker 2 (02:13):
Prepared to try and see if there can be some
more balanced trade. It agrees that, you know, there are
some problems in the global economy, and it can offer
to buy more things from the US. But the problem
is that if the ultimate aim here is to reduce
the US trade deficit with China and either put it

(02:36):
into balance or bring it in somehow into surplus, China
has made the calculation quite correctly in my view, that
there is going to be pain on both sides, but
China and its consumers are far more willing and far
more able to bear that pain. Because if you want
to reduce a trade deficit, you have to bear in
mind that trade is one side of the coin. On

(02:59):
the other side of the co in they are all
the capital flows, and these have to balance. So if
you reduce the trade deficits, what it means is that
there is less money going into the US. So Americans
are going to have to save more. They're going to
have to buy less, not just the foreign goods but
of their own but of their own goods, and there's

(03:20):
going to have to be more domestic investment into manufacturing
in the US. Now, we know that Americans love to spend,
and they love to spend on borrowed money, They've been
doing it for years, so this is going to be
a major change if they want to reduce the trade deficits.
And it's also going to have implications for the dollar
because I said that capital flows at the other side

(03:41):
of this. If you have a lower trade deficit, then
there is less demand for the dollar around the world.
And you cannot damage China's trading capabilities without also damaging
its ability to either want or require US dollars. So
this is going to weaken the US dollar over time
and ultimately threaten its status as the world's reserve currency.

(04:05):
Is the US really prepared to pay that price? I
suspect not.

Speaker 1 (04:09):
Yeah, Peter, Hey, thank you as always really appreciated, look
after yourself. That's Peter Lewis, our Asia Business correspondence. For
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