Consumers wary as China hits back with $35 billion trade war tariffs

On social media platform Weibo, word went around of a ship speeding toward China to beat the tariffs on its precious cargo: American soybeans

Accusing the United States of “typical trade bullying,” China on Friday imposed $34 billion in retaliatory tariffs on American soybeans, cars and other products, suggesting dim prospects for resolving a potentially bruising trade war between the two economic powerhouses.
 
As it has in the past, China used the moment to cast itself as a defender of the global trade order. Beijing officials portrayed Trump’s threats to tax as much as $450 billion worth of Chinese goods as a threat to global prosperity. China’s state-controlled news media echoed the sentiment.
 
But Chinese news outlets stopped short of language that would suggest appetite for a major escalation, such as a consumer boycott of American brands.

 

China has become a key market for brands such as Apple, Nike, Starbucks and General Motors. Consumer boycotts have proven effective in Beijing’s earlier disputes with South Korea, Japan and the Philippines. But targeting American goods could be trickier. The iPhones, Chevrolets and other goods that American companies sell in China are often made in China, and by
 
Chinese workers.
 
Still, some consumers said they could imagine making do without iPhones or American cars as a way to strike back against Washington.
 
“Of course I want China to fight back,” said Cathy Yuan, 32, who was shopping at an upscale Shanghai supermarket. “We are defending our rights as a nation.”

 
Other shoppers sounded warier. Fresh American beef and other high-end imports — goods that are likely to become more expensive as more tariffs are imposed — lined the shelves. “High-quality fresh food is already quite expensive, and with tariffs, prices will go up even further,” said Wan Yang, a 27-year-old seafood dealer who imports black cod and king crab from Alaska.
 
Health and hygiene concerns have led China’s increasingly well-off shoppers to prefer food imported from the United States or elsewhere.
 
“We buy imported goods because we feel they are safer to eat,” said Mike Zheng, 30, who was browsing the aisles with his 2-year-old son. “If there were domestic substitutes, then tariffs would be OK. But domestic products can’t keep up, so we’ll just have to accept higher prices.”

 
That could become a problem for Chinese leaders. Inflation is an economic gauge that is of paramount, constant concern. In the past, rising prices have contributed to political instability. The Chinese government has used price controls and subsidies to tamp down inflation, but that could get expensive quickly.
 
It may not just be buyers of American steaks who get hurt. Soybeans are the highest-value farm import from the United States that is affected by Friday’s tariffs. American growers supplied one-third of the soy that China shipped in last year, mainly to produce cooking oil and animal feed.
 

“Global soybean supply and demand is tightly balanced right now,” said Gong Yanhai, a senior analyst in Shanghai with Huatai Asset Management. Taxing American soy, Gong said, also means that China will pay more to buy beans from its biggest supplier, Brazil, where premiums per bushel have already risen in anticipation of the tariffs.
 
Around China, the trade war is being watched with a mix of worry, ire at the United States — and frank curiosity about it all.
 
On the social media platform Weibo, word went around of a ship speeding toward China to beat the tariffs on its precious cargo: American soybeans. News of the vessel’s race against the clock was reported earlier by Bloomberg.

 
The trade war could have equally important effects on the $2 trillion worth of goods that the country sells to the rest of the world, said Hua Min, an economist at Fudan University in Shanghai. A decade ago, in the wake of the global financial crisis, China’s exports cratered, and consumers and businesses at home could not spend enough to keep factories humming.
 
“The driving force of the Chinese economy is mainly exports,” Hua said. “If there are no exports, there will be manufacturing overcapacity. Manufacturing overcapacity will lead to debt. And debt will affect companies’ balance sheets. Then it will be 2008 all over again.”

 
At a Tesla dealership in downtown Shanghai, there was not much love for the idea of paying even more for the premium electric vehicles. “The trade war won’t last forever,” said Charlie Lin, 25, who works in real estate and was looking at cars. “China and the US definitely have ways of resolving it. After all, an endless fight would be bad for both countries. These are just temporary measures.”
 
Still, “China must accept this challenge,” Lin said. “We have enough stamina to fight back. We will find out what America is made of.”
 
©2018 The New York Times News Service