Cooperation and dynamism that was supposed to propel Asia into a glorious future appears to be falling apart. Caught in the throes of a global economy struggling with sluggish growth, latest US tariffs on China, the potential for Chinese retaliation, a new spat between Japan and South Korea, and the ever-present fickle fingers of nuclear-armed North Korea, developing countries in Asia are finding that the future promised to them is unlikely to be realized.
On 1 August, following a mid-morning meeting with his trade team, US President Donald Trump, as is his norm, announced through a series of Twitter tweets that he would impose a new tariff of 10 percent on $300 billion of Chinese products from 1 September. Later in the day, the president added, probably on afterthought, that he might ratchet the tariffs up to 25 percent, but that right now he was not looking to do that at the moment
The president was apparently not pleased that China had not offered concrete promises to purchase American agricultural products during the ongoing talks with his trade team, something he believed was agreed to when he met with Chinese President Xi Jinping in June at the Group of 20 summit in Japan.He also claimed that China had failed to live up to its commitment in stemming sales of fentanyl, a powerful opioid, into the United States.
Last year, the president had imposed tariffs on about $250 billion in Chinese-made goods, targeting industrial materials and components. However, unlike previous taxes, the new tariffs are expected to hit US consumers harder, as it would tax goods like iPhones and other consumer electronics, sneakers and toys.
About 85 percent of the toys sold in the United States come from China and would be hit by the new tariff. US toy companies that have already ordered for the holiday season will in all probability pass on the tariffs to customers. Apparently, Christmas and the upcoming holiday season this year are going to be costly affairs for US consumers.
Though President Trump claimed that the tariffs have cost China rather than American consumers, several economic studies have shown that US consumers, not China or other foreign importers, are bearing the weight of the duties. Moreover, retaliatory tariffs by China have severely impacted American farmers. China, which was once the biggest market for US soybean farmers, stopped buying the American product last summer in retaliation to US tariffs. By the end of 2018, the amount of American soybeans sitting in storage hit record levels.
In response to the tariffs, China’s Ministry of Commerce spokesperson said, “If the US implements new tariffs, China will have to take necessary countermeasures to resolutely defend the core interests of the country and the fundamental interests of the people.” He pointed out that the consequences of retaliatory measures by China will be borne by the US, but that it would have a “chilling effect” on the global economy.
In the meantime, in a move that could threaten cooperation between two of Asia’s largest economies, South Korea said it would respond in kind after Japan removed it from a list of countries that receive preferential treatment on trade.
South Korea’s Finance Minister, Hong Nam-ki, said that his government would take steps to exclude Japan from its own list of preferred trade partners. “Although we will continue our effort for a diplomatic resolution, we will also take steps to exclude Japan from our whitelist as well and strengthen the export control,” he said.
The spat between the two countries started last month when Tokyo placed controls on exports of three chemical materials to South Korea. The materials are used to make computer chips, among other things.
Tensions between Japan and South Korea that have simmered below the surface since the end of World War II resurfaces periodically. The latest episode erupted after the recent ruling by South Korea’s top court that its citizens can sue Japanese companies for using forced Korean labor during World War II. Japan, which removed South Korea from its white-list shortly the court ruling, has denied that the two issues are linked.
The latest escalation of tension between Japan and South Korea threatens the global supply chain for smartphones and electronic devices. South Korea is Japan’s third-largest trading partner, buying about $54 billion worth of Japanese goods, including industrial machines, chemicals and cars. More importantly, the trade spat could have repercussions on countries in developing Asia, which was just beginning to bask in the glory of a new found growth and development.
Too many of the Asia’s key indicators are currently trending in the wrong direction. Unless remedial measures are urgently put in place, the deep and enduring problems that much of Asia has faced for ages, including structural weaknesses, poverty, poor health and education outcomes will only continue to fester and drag the region down, and, once again, denying people there the chance to create better lives.
Times Report
Read Today's News TODAY... on our Telegram Channel click here to join and receive all the latest updates t.me/thetimeskuwait
