US Allies Say US-China Tariff Escalation Damages Rest of World

Trade officials from the Australian, Japanese and New Zealand embassies told a Washington trade audience that tariffs on Chinese goods are hurting their economies too. Phil Houlding, a trade counselor for the New Zealand embassy, said he doesn't like to hear leaders from either China or the U.S. "celebrating the other facing economic hardship." He noted the market turmoil of late, and said, "You've got to be a little careful what you wish for. These things rebound through a globalized world."

President Donald Trump tweeted Dec. 17, "the outside world blowing up around us, Paris is burning and China way down," and on Dec. 14, he tweeted, "China just announced that their economy is growing much slower than anticipated because of our Trade War with them. They have just suspended U.S. Tariff Hikes. U.S. is doing very well. China wants to make a big and very comprehensive deal. It could happen, and rather soon!"

Almost a third of Japanese companies have been affected by the U.S. tariffs on Chinese products, according to Shige Watanabe, minister-counselor in the Japanese embassy's economic section. "It is a fact that the trade dispute between the U.S. and China, the largest and the second-largest economies in the world, affects the Japanese economy, Japanese companies and the Japanese people," he told those attending a Global Council on Business event Dec. 19.

Reuters reported that Japanese exports to China are up just 0.4 percent from November 2017 to November 2018, and that annual growth rate had been 9 percent in the previous month.

Australia, New Zealand and Japan all said they agree with the U.S. diagnosis that there are problems with intellectual property theft, trade-distorting subsidies, state-owned enterprises and forced technology transfer in China. McLarty Associates' Tami Overby, who also participated in the panel discussion, said "the Trump administration is absolutely right to confront the challenges with the Chinese economy."

But, Australian Minister-Counselor Elisabeth Bowes said, "I don't think this tariff leverage is going to produce a long-lasting solution." When asked if the tariffs will have been a waste if Trump declares victory in the next three or six months without getting structural changes in China, Bowes disagreed. "I think any outcome that steps back from tariff escalation, which hurts the world economy, it's not wasted. Any positive progress towards an agreement is something we would welcome very much."