Trump tariffs risk ‘dividing the world’, says Xi Jinping

Donald Trump’s planned trade tariffs on goods from China and the rest of the world threaten to “divide the world,” Xi Jinping has warned.

China’s president said measures to curb trade would be like “going back in history” as the country braces for higher US tariffs ahead of the US president taking office.

Trump has threatened to impose a 60% tax on all imports from China to the US, and 10% on that 20 pieces on products from other countries.

Mr Xi said: “Blocking economic cooperation under various excuses and dividing an interdependent world goes back in history.

“The world has entered a new period of turbulence and change. Unilateralism and protectionism are spreading, the fragmentation of the world economy is increasing. Economic globalization faces serious challenges.”

Xi’s warning comes at a time when Western countries are cracking down on what they see as unfair practices by Beijing introducing retaliatory tariffs.

The US president-elect is considering new import duties after long complaining about Chinese abuse of the trading system. Criticisms included high tariffs on goods sold to China, subsidizing products and then dumping them cheaply in other countries, and industrial espionage.

Other Western countries have similarly expressed concerns about China’s approach to trade. The European Union has accused Beijing of “predatory” industrial practices, heavily subsidizing the production of goods such as solar panels. It claims this allows Chinese exporters to undercut European manufacturers and dominate the market.

The Brussels investigation into the electric vehicle market found similar “unfair subsidization”, leading to the country imposing 35% import tariffs on Chinese battery-powered cars.

In his speech on Friday, Xi signaled that he wants China and its allies to play a greater role in setting the terms of global trade, implying less influence for countries such as the US and European economies.

The Chinese President said: “We must properly guide the development of economic globalization, and not follow the old path of allowing a few countries to be hegemonic.

“We must boost economic globalization to unleash more positive impacts and enter a new phase that is more dynamic, inclusive and sustainable.”

Economists have warned that a trade war risks slowing global economic growth, undermining the recovery from the pandemic, which has already been mediocre in many cases.

Forecasts from the National Institute of Economic and Social Research indicate that after five years of the trade war, US GDP will be 4 percent lower than it would be without new tariffs, while for China the equivalent hit could be 2.1 percent.

Eurozone GDP risks being 1.1% lower than it would be without a trade war, while the global economy is projected to miss 2.1% GDP growth.

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