Donald Trump and China

The First US President Getting Involved in A Lawsuit in China

In December 2006, Donald Trump applied to Chinese State Administration for Industry and Commerce Trademark Office for registration of trademark “TRUMP” to be used in the category no.37 (interior decoration of real estate, commercial, residential and hotel). But the trademark was registered two weeks earlier by a man named “Dong Wei”. The expiration date of the trademark registration trademark was until January 20, 2020. After the application being rejected by the Trademark Office, Donald Trump sued the Trademark Office in 2014 but lose the lawsuit. Trump appealed to a higher court, on August 26, 2015 the Beijing Municipal Higher People’s Court upheld the original judgment and the judgement was final (court.gov.cn 2015). Donald Trump paid the case fee of two hundred yuan. But the case did not end with Trump’s failure, five days after Trump’s winning the presidential election, his trademark application was finally accepted by the Trademark Office in the category no.37 making one of the most surprising comeback just like his winning of the presidential election.

Donald Trump’s Controversial Call With Taiwan‘s Leader Tsai Ing-Wen

According to the media report in China, Tsai Ing-Wen called Donald Trump to congratulate his success in presidential campaign. The phone conversation was soon confirmed by Donald Trump in a tweet saying “The President of Taiwan CALLED ME today to wish me congratulations on winning the Presidency. Thank you!” To Trump, the call is a merely “congratulatory call”; but to China it is a serious and formal conversation between the US leaders and Taiwan leader after US broke the diplomatic relationship with Taiwan in 1979. In response to the phone call, China’s Taiwan Affairs Office spokesman An Fengshan said Trump’s call with Taiwan’s leader was only small trick which will not change Taiwan’s status as an integral part of China. Under pressure and accusations, Trump told Fox News, “I fully understand the ‘one China’ policy, but I don’t know why we have to be bound by a ‘one China’ policy unless we make a deal with China having to do with other things, including trade” (smh.com.au 2016).

Similarly, Hilary Clinton, then Donald Trump’s major competitor in the US presidential election campaign, agreed that US may terminate the US-Taiwan defense arrangement by 2015 in exchange for a write-off of the $1.14 trillion of American debt held by the Chinese government. But both Donald Trump and Hilary Clinton are wrong, Taiwan is not something that is negotiable. In particular, Trump’s doubt about China’s determination to defense the “one China policy” is too superficial and naif. Many Chinese people and domestic media believed that once Taiwan announces its independence or it is interfered by external forces, China will retake Taiwan within 48 hours or 24 hours. Also, with the raise of China’s military and economic power, China will not let Taiwan problem maintain unsettled. Some Chinese military experts claimed that China will retake Taiwan in or before year of 2025.

Trump‘s Promise To Label China As A Currency Manipulator

Through out his presidential campaign, Donald Trump had mentioned a number of times that he would include China as one of the currency manipulators and it would be done on his first day as the president of the United Stated if he would be elected as part of the policy changes he proposed to boost the US economic growth and reduce the trade deficit between US and China. During the US election, Mr Trump also repeatedly accused China’s currency policy as “raping” the US economy. However on 12 April 2017, just several days after having a meeting with Chinese President Xi Jinping in Florida, Donald Trump broke his promise by saying that his government will not label China as a currency manipulator (bbc.com 2017).

Trump Threatened To Impose 45% tariff On Imports From China

Besides the promise to label China as the “currency manipulator”, Donald Trump also claimed that he will impose tariffs up to 45% on imports from China in order to bring back the jobs for the middle class. Is that possible and practical? The answer is no.

Firstly, US’s imposing special tariff on imports from China is against the WTO principle of most-favoured-nation (MFN) treatment which requires that WTO members cannot normally discriminate between their trading partners (Grant a nation a special favour such as a lower customs duty rate for one of their products and you have to do the same for all other WTO members.) (wto.org 2017)

Secondly, the current US legal system does not empower President Trump to impose 45% tariff raise on imported Chinese goods. According to the Public Laws, the US President can impose temporary import surcharges in case fundamental international payments problems require special import measures to restrict imports, but such temporary increase of import tariff cannot exceed 15% ad valorem and should not last for more than 150 days (law.cornell.edu 2017).

Thirdly, US is not prepared for a comprehensive trade war with China. In the recent years, though the global trade is slowing, but exports of US goods and services to China continue to outpace exports to other major markets. In particular, the high-end computer, IT and service industries will lose the fastest growing market to other economies such as EU in case a trade war is started. In term of the lower end American industries, will they benefit from the trade war between China and US? The answer is negative. Rational customers will still choose to buy products imported from other developing countries such as Thailand instead of the much more expensive goods produced locally in the US.

Fourthly, China’s huge holdings of U.S. government debt makes any incumbent US President become extremely prudent when making a decision to go against China. If China stops buying or elects to sell even a small portion of its bond holding, Treasury prices would drop and yields would rise. The result of higher rates, in turn, would likely be slower economic growth and higher borrowing costs for the U.S. government leading to a possible fiscal crisis.

Reference list

bbc.com 2017 Donald Trump: China ‘not a currency manipulator’ [online] link: http://www.bbc.com/news/business-39583571

court.gov.cn 2015 Second Instance Administrative Judgment Between Donald Trump and State Administration for Industry and Commerce Trademark Office (唐纳.川普与中华人民共和国国家工商行政管理总局商标评审委员会其他二审行政判决书) [online] link: http://wenshu.court.gov.cn/content/content?DocID=05f49f37-bb65-4994-8e0d-6c60affe86bd

law.cornell.edu 2017 19 U.S. Code § 2132 – Balance-of-payments authority [online] link: https://www.law.cornell.edu/uscode/text/19/2132

smh.com.au 2016 Donald Trump doubles down on Taiwan, says US not necessarily bound by ‘One China’ policy [online] link: http://www.smh.com.au/world/us-election/donald-trump-doubles-down-on-taiwan-says-us-not-necessarily-bound-by-one-china-policy-20161211-gt8vsn.html

wto.org 2017 Principles of the trading system [online] link: https://www.wto.org/english/thewto_e/whatis_e/tif_e/fact2_e.htm

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