By lowering tariffs with other countries, China is “rolling out the red carpet for the rest of the world” as the trade war with the US continues, CNBC reported citing a study from think-tank Peterson Institute for International Economics (PIIE).
(File photo: VCG)
According to the think-tank report, over the past year, China has lowered duties on goods from countries who compete with the US.
PIIE said that although China’s tariff slash initiative received less attention by lowering duties with trading partners.
“China has begun rolling out the red carpet for the rest of the world. Everyone else is enjoying much-improved access to China’s 1.4 billion consumers,” the report said.
“Trump’s provocations and China’s two-pronged response mean American companies and workers now are at a considerable cost disadvantage relative to both Chinese firms and firms in third countries,” said PIIE researchers, which include trade expert Chad P. Bown.
On the China side, PIIE considers that lowering tariffs on products originating from other countries allows China to limit domestic economic damage since Chinese companies have an option to switch from US suppliers as they can import similar products from other countries at better prices.
The PIIE report, released on June 12, pointed out that tariffs are costly to those countries who impose them with China.
“Concern over such costs explains both China’s restrained retaliation against the US and its decision to reduce tariffs toward the rest of the world,” the researchers said.
By reducing tariffs on imports from other countries, US exporters will face increasing disadvantages relative to competitors in Canada, Japan, and Europe. As the researchers pointed out, the result from the last year saw a decrease in US good entering China.
Citing examples of US products like seafood that have lost significant market share in China, US lobster exports fell 70 percent after Beijing raised tariffs 25 percent last July.
Meanwhile, Canada’s lobster exports nearly doubled because of China’s tariff cuts.
The findings come as US firms have appealed to the Trump administration to resolve the trade conflict. They argue that heightened tariffs have hurt US businesses and consumers.
Also, it’s not only China that has squeezed out US firms as a result of Trump’s policies.
After Trump pulled out of the Trans-Pacific Partnership, US beef exporters found themselves at a disadvantage versus their peers in Japan, according to PIIE.
“This is just one more good reason why trade wars are not easy to win,” said PIIE.