China economic and political target of Trump gamble

In his tariff warfare, it is likely Donald Trump has seriously underestimated the strength and resilience of China (“Trade war is only getting started”, 10/4). Slapping a 125 per cent tariff on imports from that country will clearly hurt there and result in unemployment, as well as increasing anger against the US. However, given China’s strong leadership the population there is likely to accept and endure the resulting hardship to combat what will be seen as a hostile economic move against their country.

In contrast, the citizens of the US, almost equally divided politically and used to a high standard of living, will not have the patience to see through a prolonged trade war that greatly reduces their choice of goods and increases their cost of living. Trump is gambling in a big way, politically and economically, with his supporters, all the nations trading with the US, and particularly with the second-largest economy in the world. He is already losing support among the traditional allies of the US. Yes, the trade war has only just started, and he may have some wins but, overall, he is seriously affecting his country’s image as a reliable trading and alliance partner, and he is unlikely to emerge as a clear winner.

Michael Schilling, Millswood, SA

Donald Trump has three consistent aims: to reset with tariffs a trade system now unfairly favouring most trade partners, especially China; to raise money through these tariffs to help reduce the huge US budget deficit and national debt, and; to reinforce his strategic emphasis on the Indo-Pacific by impeding Chinese influence through less profitable trade and increased military strength of the US and regional allies. In this case it’s not just about economics. It’s also about who dominates our part of the world, the US or China.

Doug Hurst, Chapman, ACT

Government officials often claim that Australia imposes no tariffs on goods from the US. However, one must ask: isn’t the Luxury Car Tax effectively a tariff, just by another name? The LCT is applied at a rate of 33 per cent on the portion of a vehicle’s value exceeding a certain threshold, regardless of whether the car is imported or locally sourced (though no local manufacturing remains). This disproportionately affects imported premium vehicles, many of which come from the US. So, if it’s not a tariff in name, it certainly acts like one in effect. Why then are Australian consumers being penalised for aspiring to drive safe, efficient, modern vehicles that happen to cost more than an arbitrary benchmark? With inflation and evolving technology, many mid-range vehicles now attract this tax – hardly “luxury” by today’s standards. It’s time for an honest review of this outdated policy.

Jonathan Rogers, Adelaide, SA

No one should be surprised that globalisation is coming to an inglorious end. Many countries found ways around World Trade Organisation rules, not least China, which successfully argued that it was an underdeveloped country, despite its highly developed economy, and wasn’t bound by WTO rules.

As much of the world goes ballistic over Donald Trump’s broad-ranging tariffs, one should stop and consider the reasons why he has done this. The fact is that for many years the US was effectively penalised in its trade dealings with other countries that greatly restricted US imports while at the same time increasing their exports into the US. The US consumer was able to buy goods cheaper because foreign imports were relatively cheap, largely because foreign countries such as China used cheap labour and subsidised their exports.

However, the impact on the US was a major deterioration in the US manufacturing base as factories closed and jobs were lost to overseas competitors. This was never a sustainable position for the US economy.

Brian Barker, Bulimba, Qld

Amid escalating trade tensions between China and the US, some Chinese exporters are taking the drastic step of ditching shipments mid-voyage and surrendering containers to shipping companies to avoid crushing tariff costs. Those are goods that US importers expected to see but which will not be delivered. Not even to higher prices. It may take a few weeks until the effects will be seen in US stores but empty shelves, especially for low-value everyday stuff, are now sure to appear.

Norman Broomhall, Port Macquarie, NSW