Hopes for a breakthrough in the US-China trade talks in Shanghai last week were faint after a bout of pugnacious tweets from US president Donald Trump. His subsequent announcement of plans to impose 10 per cent tariffs on the remaining $300bn of Chinese imports from September 1 have extinguished them. This latest tranche of tariffs will cover consumer goods for the first time. With growing data pointing to the slowing of the global economy, Mr Trump’s efforts to isolate China from global trade are creating a ripple effect.
The trade war is moving into ever more uncharted waters. Mr Trump’s assumption that China would buckle has been shown to be little more than wishful thinking. Instead, Beijing has dug in its heels and removed the prospect of immediate concessions. Without a softening of stances, the trade war will only rumble on, dragging down the world economy in its wake.
Mr Trump’s latest tariffs speak to a breakdown of trust between the sparring powers. Only a few months ago, there had been hopes that a trade deal was within sight, partly based on the decent working relationship between Mr Trump and Chinese president Xi Jinping.