Is China the victim or a villain in the tariff war with the US? Is China unjustifiably being targeted by the lunatic in the White House? In its dealings with other countries, is China being fair or is it responsible for dumping cheap steel and textiles, resulting in the closure of firms and industries and loss of income for thousands of people?
These are crucial questions as China rides a wave of international sympathy after being targeted by Donald Trump with tariffs that, at the writing of this article, stood at 154%, except for tech gadgets that Elon Musk and other tech billionaires need from Xi Jinping. Both the act of increasing the tariffs, as well as the manner in which it was done, have left the US looking like the bully it is, and China the victim of the playground bully.
Using what he called an emergency, Trump increased tariffs on virtually all countries in the world ranging from 10% to 50%. Those affected were told not to retaliate or they would get a double dose. While many countries complained and dithered how to respond, China issued countertariffs.
The decimation of industries in many countries has made possible the impressive growth of the Chinese economy, based on the export of its myriad products
Trump increased the China tariffs, which within a week reached 154%. And just like that, tariffs for almost everybody else were reduced to 10% for 90 days, except for China, of course.
What does it all mean? It means a Chinese non-tech export to the US that may cost R100, would now cost R254 when it arrives in the US, before markups. A US export to China costing the same amount would be increased to R225 before markups by the final seller.
If we look at this from the US side, where Chinese exports to that country amount to an annual $440bn (R8.28-trillion), Chinese goods were popular because they were cheap. The tariff will make them less affordable and the hope is that this would make similar American items cheaper by comparison.
Until late in 2024, Chinese exports to South Africa through platforms such as Temu were largely tax-free. These ranged from clothing to leisure drones and household items. South Africa has since introduced a tax on such imports.
But it is in the steel and textile sectors that we are most affected. Two years ago the International Trade Administration Commission (Itac) conducted an investigation into Chinese dumping after complaints from ArcelorMittal and other companies. The investigation looked at the impact of the dumping on the Southern African Customs Union countries, and not just South Africa.
Itac found that Chinese companies were dumping a number of products at low prices that affected local producers. It recommended a new tariff regime but that obviously has not stemmed the tide as ArcelorMittal is closing huge chunks of its operations in Newcastle and Vanderbijlpark.
In contrast, last Saturday, the British parliament was recalled for an emergency session to help save British Steel’s Scunthorpe plant from closure by a Chinese company, Jingye Group, which has been operating it.
The company had stopped ordering raw materials for the furnaces, saying it was losing money with primary steel production. It wanted that primary production to shift to China. Within one day, the UK government had called MPs and the House of Lords to meet, debate and agree upon a rescue plan, and a bill was approved and signed into law by King Charles to give the government control over the running of British Steel.
The move saved 3,000 direct jobs and many more dependent on the operation of the plant. ArcelorMittal has pleaded for help to deal with dumping and has indicated that thousands of jobs are under threat as it closes long-steel production. But there was no emergency sitting of parliament in Cape Town or effective tariffs to protect the jobs.
In the textile sector, Malawi and Zimbabwe have had to close down plants belonging to David Whitehead Textiles because of dumping. Malawi laid off 2,000 workers in 2001. The same company’s KwaZulu-Natal branch has been sold to Stefano Magni as Whitehead bowed out. Many will remember the effort to revive Rex Trueform in Cape Town after the decimation of the Cape textile industry. While India, Pakistan and other sweatshop centres of the Far East are also to blame, China is the major culprit.
The decimation of industries in many countries has made possible the impressive growth of the Chinese economy, based on the export of its myriad products. As we decry the bullying of China by America, let’s spare a thought for the workers at ArcelorMittal in Vanderbijlpark and Newcastle who, because of Chinese dumping, and the inability of our government to protect them, now face a bleak future, forced to lose jobs in an environment of high unemployment.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.