Taiwan to Be Affected in U.S.-China Trade War

  Taiwan to Be Affected in U.S.-China Trade War

United Daily News Editorial (Taipei, Taiwan)

March 25, 2018

 Translation of an Excerpt

US President Trump earlier announced the imposition of special customs tariffs on imported steel and aluminum, and recently he further signed a "Memorandum of Economic Aggression," imposing trade sanctions to the tune of US$60 billion, targeting Mainland China for violating intellectual property rights (IPR). Besides announcing the start of the US-China trade war, this move asked various countries to jointly exert pressure on the Mainland. Beijing talks tough but it has so far yet to retaliate in force. As Taiwan was not listed among countries exempted by the US for additional steel and aluminum customs duties, and add the fact that many Taiwan businesses export merchandise directly from the Mainland, they are bound to be affected by the US- China trade war. We do not have the privilege of just watching the wildfire from across the river.

Trump then invoked Section 301 concerning IPR to launch sanctions against Mainland China; the goal is consistent. Besides shrinking the ever increasing trade deficit between the US and China, it also wants to assist US businesses to enter the Mainland market with national treatment. The Beijing authorities did not want to appear weak, so they also announced additional import duties on US merchandise worth US$3 billion, with a much smaller scale. It is generally believed that the Mainland is adopting "salami tactics,” not wanting to exhaust its ammunition. Beijing’s Ambassador to the US Cui Tiankai told the press: "If someone wants to act tough, we will play to the end, and see who will last longer."

We believe that the Tsai government should at least brainstorm on three serious questions. First, it must judge whether the US-China trade war will continue for a long time, whether the scale will expand, and how large an impact our side will suffer; what kind of adjustments should we adopt for our industrial policy? Is the short-chain [just-in-time] revolution in conformity with our needs and does the government have any measures for easing the difficulties? Secondly, the global free trade system, after the twists of the trade war this time, has virtually completely changed its face. We have relied on the WTO mechanism and the free trade agreements we have sought in the past; should we change our policies, seeking in turn the blessing of other forms of trade systems? Thirdly, the United States has, from a defender of global trade, suddenly become the new hegemon of protectionism. Whether we will win or lose in this trade war, whether this war is long or short-lived, do we only have one choice, that is dependency, or do we have other hedging strategies?

When two elephants fight, the grass underneath suffers. This is exactly the scenario of the US-China trade war. Even before any spring breeze comes from the US "Taiwan Travel Act," the smoke from gunpowder has arrived.

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