MNI: Chinese Firms To Raise U.S. Prices If 10% Tariff Imposed
MNI (BEIJING) - China's manufacturers would be able to raise prices in the U.S. to compensate for the effect on their profits of a 10% tariff on Feb 1 without a significant impact on sales, Chinese policy advisors told MNI.
"We are not too worried about the 10%,” said Ding Yifan, researcher at the World Development Research Institute of the State Council, citing his recent surveys of exporters at major hubs Guangdong and Yiwu, ahead of threats by U.S. President Donald Trump to impose a 10% charge on all Chinese shipments from next month.(See MNI INTERVIEW: China Preps For U.S. Tariffs)
Beijing would be open to a new trade agreement with Washington similar to that reached in 2019, with China able to increase agricultural imports and promote U.S. consumer goods, Ding said. But he noted that China had since diversified its trade, strengthening its position.
"Last year China's total trade with global south countries surpassed 50% for the first time, meaning U.S. leverage of its domestic market access is less powerful than six to seven years ago," Ding said. "Beijing would also want the removal of trade barriers on EVs and high-tech equipment in any understanding with Washington.”
RARE EARTHS
Beijing is likely to hit back against any U.S. tariffs, said Wang Yiwei, director of the Inistute of International Affairs at Renmin University, pointing to recent Chinese restrictions on exports of rare earths and other raw materials crucial for high tech products. The U.S. is also likely be restrained from stronger measures, such as a 60% tariff touted during Trump's election campaign, for fear of the inflationary impact on its own economy, Wang said.
"China will not make concessions so easily this time,” Wang said, adding that structural factors such as dollar dominance made reducing the U.S. trade deficit more difficult.
But Beijing would also take into consideration how Trump's goals had broadened to include reindustrialisation versus his previous emphasis on reducing the U.S. trade deficit with China, he said. China’s exports to the U.S. totalled USD524 billion last year.
Vice Premier Ding Xuexiang recently told delegates in Davos that China did not seek a trade surplus and would promote balanced trade by increasing demand for high quality foreign goods and services. (See MNI INTERVIEW: China Needs Further CNY3 Trn To Keep 5% GDP)