Tit for tat tariff war
is preceding at break-neck speed between the two trading giants: America and China.
From all those smoke and mirrors a business strategist can quickly discern that
both are playing flex muscle but pull punches business strategy. Here is the
play in action:
Trump 2.0 is a continuation of his previous
administration of 2017-2021 except in the manner he is playing the geoeconomics
game over tariff warfare. In February 2025, he imposed a blanket 25% tariff on
imports from Canada and Mexico but spared China with only 10%. All three
countries accounted for more than 40% of the total imports of America. While there
was flurry of counter tariff from Canada & Mexico, China played safe by imposing only 10% tariff on imports
of cars from America.
America has already flexed muscle and punched on
the face of China. Yet, Wang Yi the Chinese foreign minister who was cool as
cucumber declared: ‘America cannot show two faces to China;
a friendly one and a frowning one’.
But that did not distract USA; Trump did not want
to pull punches at all. On March 3, he increased the existing blanket tariff of
10% over imports from China to double at 20%. Trump failed to understand how China
would react. China did flex the muscle
but was circumspect re the punches. She does not want to punch above her weight, may be!
Flexing muscle and at the same time pulling punches
China made retaliatory counter tariff on imports from America in a scale as hereunder:
1. Tariff rate of 10% on chicken, wheat, corn, cotton etc.
2. Tariff rate of 15% on sorghum, soybean, pork, beef, fruits, vegetable, dairy products etc.
3. Tariff rate of 25% on aluminium, airplanes,
cars, and few other capital items.
Ostensibly, China business strategy is leveraging on the following geoeconomics
framework:
a) US domestic production is lower than her consumption hence large quantum of imports into the country
b) China domestic production is greater than her
consumption hence large quantum of exports out of the country.
Who will the tariff war? Your guess is as good as mine. One hint: any country that can navigate her business strategy amid geoeconomics would finally be a winner!
Cheers!
Muthu Ashraff Rajulu
Business Strategist
Mobile: + 94 777 265677
E-mail: cosmicgems@gmail.com
Blog: Business Strategist
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