China Ponders Export Limitations to Quell Trump's Trade Onslaught

China is considering the restriction of certain exports to the U.S. in the face of an intensifying economic offensive by President Donald Trump‘s administration.

What Happened: Advisers to the Chinese government have indicated that Beijing is mulling over the implementation of voluntary export restraints (VERs).

This tactic, previously employed by Japan in the 1980s to ward off increased import duties from the U.S., could potentially aid China in deflecting criticism regarding its “economic imbalances”, particularly in sectors such as electric vehicles and batteries.

According to a report by The Wall Street Journal, despite the imposition of new tariffs by Trump, amounting to a cumulative 20%, there have been no negotiations between Beijing and Washington.

Nevertheless, concerns over China’s market-distorting practices were voiced by Treasury Secretary Scott Bessent in a conversation with Chinese Vice Premier He Lifeng last month.

"The insistence of the Trump administration on using tariffs as a tool of trade policy might make China receptive to voluntary export restraints," Doug Irwin, economics professor at Dartmouth College told the Journal.

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According to advisers, China may propose export restraints on EVs and batteries in return for investment opportunities in the U.S. This proposition could potentially be appealing to Trump, who has demonstrated a willingness to accept more Chinese investment in the U.S.

The outlet also highlighted that while Beijing is contemplating export restraints, it has no plans to alter its manufacturing-centric policy.

Instead, it perceives this as a negotiation tactic with the Trump administration that could assist China in enhancing its value chain.

Why It Matters: The potential implementation of VERs by China could mark a significant shift in the ongoing trade war between the two economic superpowers.

By voluntarily limiting exports, China could potentially mitigate the impact of U.S. tariffs and negotiate better terms for its investments in the U.S.

This move could also signal a strategic shift in China’s approach to dealing with trade disputes, moving away from retaliatory tariffs towards more nuanced negotiation tactics.

However, the success of this strategy will largely depend on the Trump administration’s response and willingness to negotiate.

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