On September 17, US President Donald Trump vowed to tax every single import coming from China if it retaliated against his tariffs on US$200 billion in Chinese goods.
Beijing struck back, as expected, with tariffs on US$60 billion worth of American imports, yet there has been no sign that Trump is preparing to make good on his threat, despite a passing remark on Monday that “we could go $267 billion more”.
The lull in what has otherwise been an incendiary and fast-moving trade war suggests a directional shift in US strategy, analysts say, as the administration weighs other non-tariff options that would avoid domestic resistance ahead of pivotal midterm elections.
These include military action, such as sanctions on the Chinese military and an increase in naval exercises around China’s territorial waters; economic sanctions to counter religious suppression; and an increase in anti-China rhetoric, including accusations of Chinese interference in US elections.
Speaking on Thursday about countering what he called China’s “whole-of-government approach” to influencing US affairs, US Vice-President Mike Pence said the United States would “continue to stand strong for our security and our economy”, but did not offer any indication that the administration was preparing to move on tariffs on all Chinese imports.
Voter sentiment ahead of the November 6 midterm elections could be a crucial reason tariffs aren’t being increased further, observers say.
“There’s no question that domestic politics has to be very, very top-of-mind for the administration in the run-up to the midterm elections,” said Josh Green, co-founder and CEO of Panjiva, a company that provides data on global trade.
Expanding tariffs to cover all Chinese imports could mean price increases for consumer goods including cellphones, apparel and toys, which so far have largely been spared the heavy hand of duties. “It’s not a coincidence that the early tariffs were specifically not product categories where consumers were likely to feel the pain,” Green said.
The unprecedented act of imposing tariffs on all Chinese imports “could weigh on minds of some trade negotiators”, said Orit Frenkel, who was director for trade in hi-tech products at the Office of the US Trade Representative (USTR) in the 1980s.
Frenkel, who now runs the global consulting firm Frenkel Strategies, did note that Trump’s successful negotiation of the US-Mexico-Canada trade agreement may embolden his faith in the power of tariffs.
“[Trump has] said point blank that tariffs are great, tariffs are successful, tariffs have been useful in reaching an agreement,” she said, referring to his claim that the prospect of tariffs had pressured Canada into accepting the deal.
But so far that has not been the case with Beijing, which has shown no sign of bending to Washington’s will during any of the multiple trade war escalations since tariffs began in early July.