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Trump And China: What Can He Actually Do?

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Epoch Times

By Valentin Schmid

Immediately after Donald Trump became president-elect, the Chinese yuan fell through key support at 6.80 yuan per dollar, the lowest level since 2010.

The market reaction is hardly surprising, as Trump and his advisers have for a long time accused China of being an unfair trader and currency manipulator. They also vowed they would slap tariffs on Chinese goods if China doesn't play fair in trade.

Trump adviser Peter Navarro says China has an unfair advantage because it follows lower health and safety standards and uses slave labor to keep labor costs competitive.

"If we learned anything from the World Trade Organization and NAFTA, it is that you have to put in stringent rules for worker health and safety protection," he said, also mentioning China's export subsidies and currency manipulation.

According to Navarro, if China doesn't stop these practices, the United States will impose countervailing tariffs on Chinese products. Tariffs would result in fewer exports to the United States and therefore less demand for the Chinese currency.

"When Donald Trump talks about tariffs, they aren't the endgame. The goal is to use tariffs as a negotiating tool to stop cheating. But if the cheating does not stop, we will impose defensive tariffs," he said.

What Can Trump Do?

Victor Sperandeo, president and CEO of Alpha Financial Technologies LLC, thinks the United States could cap trade at a certain level, which "will harm China more than the United States. If we buy $500 billion, they have to buy $500 billion," he said in an email. The United States absorbed 20 percent of China's exports, worth $483 billion in 2015.

Other commentators think a Trump administration won't be able to implement very harsh protectionist policies at all, because the traditionally pro-trade Republican Congress would have to consent as well.

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Comments (4)

PaFromFL profile picture
So recent market moves can be explained by post-election short covering, Chinese bond selloff in reaction to capital outflows, and institutional buy-in based on the faulty conclusion that inflation is back in control?
Ben Gee profile picture
The US has the greatest economy in the world, Trump does not have to make the US great, it already is the greatest.
Trump not only can be a great US president, he can be a great world leader which Obama lost the chance to be.
The US has the know how and the resources to make the whole world better while getting greater at the same time.
1. The US can help the poor countries with manufacturing and take their product in return. This would create a market for US capital goods while reducing the USs dependent on Chinese manufactured goods.
2. By improving the living condition of poor countries, they will be more friendly and less relying on extreme measures which would make the world unsafe.
3. The US has the resources to help poor countries with education.
4. The US can help poor countries with deseases control.
5.When the poor countries improve, they will be better partners in trade and politically.
And if Trump do all these, he will go down in history not only as a great US president but also as a great world leader.
the repubs would never let this happen. anti-foreign aid party.
Trump will only nibble at the edges, and then rebrand the controversial Obama/Hilary policies as something new. After all, a fresh coat of paint on a house does make it look different an new.

However, he will try to radically change those policies than negatively impact the Trump Enterprise and subsidiaries radiating out to the interests of his kids. For example, look for a concerted effort to purge the IRS and man key staff positions with Trump loyalists.
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