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Peter Lewis: Asia Business Correspondent on Donald Trump reportedly considering slashing tariffs on China · Best of Business

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  Speaker 1: You're listening to a podcast from News Talks. They'd be
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  Speaker 2: Now, the Wall Street Journal is reporting that Donald Trump
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  Speaker 2: is considering slashing tariffs on Chinese goods by more than half. Now.
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  Speaker 2: No decisions have been made just yet, reportedly, but that
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  Speaker 2: would mean that tariffs could come down to between fifty
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  Speaker 2: and sixty five percent. China, on the other hand, has
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  Speaker 2: signal it's open to trade talks but won't negotiate under
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  Speaker 2: juris now. Peter Lewis is our Asia business correspondent with
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  Speaker 2: US Now have.
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  Speaker 3: Peter Good Evening, Heather.
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  Speaker 2: It doesn't I meaning nothing is set in stone just yet,
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  Speaker 2: but it feels like things are calming down.
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  Speaker 3: Yet they are calming down, But I think from China's perspective,
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  Speaker 3: the way they're presenting this, particularly that Wall Street Journal
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  Speaker 3: reports which suggested tariff's on China could be halved, they
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  Speaker 3: say it as Trump blinking first and it being a
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  Speaker 3: vindication of presidency's strategy, which is to hang tough there,
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  Speaker 3: as you said earlier, not to be bullied, and not
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  Speaker 3: to negotiate under juss Now. Scott Besson's the US Treasury
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  Speaker 3: Secretary yesterday said that Trump hasn't offered to just remove
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  Speaker 3: tariffs on his own. There has to be a mutual
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  Speaker 3: the escalation and tariffs sort of come off together. Well,
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  Speaker 3: China has made it very clear that that isn't going
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  Speaker 3: to happen, and it does appear that the White House
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  Speaker 3: is misreading the room again here, China's view has been
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  Speaker 3: very much, you put these tariffs on. We didn't ask
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  Speaker 3: for this, we didn't start this trade war. Therefore, you
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  Speaker 3: are going to have to take them off, and once
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  Speaker 3: you do that, we are then open to negotiations. But
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  Speaker 3: this idea that there's going to be some mutual reduction
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  Speaker 3: in tariffs over time is not what China has been saying.
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  Speaker 3: And furthermore, they sort of see it as a sign
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  Speaker 3: that this is an administration in the US that is
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  Speaker 3: in some disarray. It doesn't have a trade or economic policy.
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  Speaker 3: You have taris put on one day, then spended the next,
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  Speaker 3: then exemptions, a whole bewildering array of exemptions announced. This
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  Speaker 3: is very much giving the impression to China that there
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  Speaker 3: isn't a coherent trade policy or strategy. It's being made
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  Speaker 3: up as they go along on the whim of one
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  Speaker 3: man in the White House.
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  Speaker 2: What is China prepared to give.
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  Speaker 3: Well, it's prepared to try and see if there can
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  Speaker 3: be some more balanced trade. It agrees that, you know,
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  Speaker 3: there are some problems in the global economy, and it
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  Speaker 3: can offer to buy more things from the US. But
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  Speaker 3: the problem is that if the ultimate aim here is
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  Speaker 3: to reduce the US trade deficit with China and either
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  Speaker 3: put it into balance or bring it in somehow into surplus,
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  Speaker 3: China has made the calculation quite correctly in my view,
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  Speaker 3: that there is going to be pain on both sides,
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  Speaker 3: but China and its consumers are far more willing and
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  Speaker 3: far more able to bear that pain. Because if you
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  Speaker 3: want to reduce the trade deficit, you have to bear
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  Speaker 3: in mind that trade is one side of the coin.
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  Speaker 3: On the other side of the coin, they are all
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  Speaker 3: the capital flows, and these have to balance. So if
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  Speaker 3: you reduce the trade deficits, what it means is that
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  Speaker 3: there is less money going into the US, So Americans
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  Speaker 3: are going to have to save more. They're going to
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  Speaker 3: have to buy less not just the foreign goods but
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  Speaker 3: of their own but of their own goods, and there's
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  Speaker 3: going to have to be more domestic investment into manufacturing
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  Speaker 3: in the US. Now, we know that Americans love to spend,
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  Speaker 3: and they love to spend on borrowed money. They've been
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  Speaker 3: doing it for years, So this is going to be
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  Speaker 3: a major change if they want to reduce the trade deficits.
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  Speaker 3: And it's also going to have implications for the dollar
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  Speaker 3: because I said that capital flows are the other side
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  Speaker 3: of this. If you have a lower trade deficit, then
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  Speaker 3: there is less demand for the dollar around the world,
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  Speaker 3: and you cannot damage China's trading care abilities without also
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  Speaker 3: damaging its ability to either want or require US dollars.
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  Speaker 3: So this is going to weaken the US dollar over
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  Speaker 3: time and ultimately threaten its status as the world's reserve currency.
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  Speaker 3: Is the US really prepared to pay that price? I
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  Speaker 3: suspect not.
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  Speaker 1: Yeah.
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  Speaker 2: Peter, Hey, thank you as always really appreciated. Look after yourself.
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  Speaker 2: That's Peter Lewis, our Asia Business correspondence.
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