The EconomistAugust 31st 2019 Finance & economics 63“I
think itwas necessary,” said Presi-
dent Donald Trump of the “rough
patch” the world economy has been going
through as a consequence of his shake-up
of the global trade regime. His comments
came on August 26th, towards the end of
the g7 meeting of rich-world leaders in
Biarritz, France, and a particularly bumpy
series of trade announcements. There is
still plenty of turbulence ahead.
The drama started on August 23rd,
when the Chinese government announced
its plans for retaliation in response to an
earlier tranche of American tariffs. China’s
average tariff on imports from America
(weighted to match America’s global ex-
ports in 2017) will rise from 20.7% to 21.8%
on September 1st, and to 25.9% on Decem-
ber 15th (see chart), by which time 69% of
America’s exports to China will be affected.
Aircraft, integrated circuits and phar-
maceuticals were spared, perhaps in recog-
nition that tariffs on those would hurt Chi-
na more. But previously announced tariffs
on cars and car parts that had been sus-
pended as a goodwill gesture are now to
come into force in December.
Hours later, Mr Trump hit back, accus-
ing China of being “politically motivated”
(as if he was not). He announced counter-
tariffs of an extra five percentage points on
over $500bn of imports from China. By the
end of the year American tariffs on Chinese
goods, on a weighted average, will be
24.3%, up from 3.1% before Mr Trump’s
trade conflict began. Ominously, he
tweeted a reference to the International
Emergency Economic Powers Act of 1977,
saying he could use it to go much further.
As its name suggests, this law grants the
president sweeping powers. Bill Clinton
used it in 1997 to ban all transactions, in-
cluding trade, with Sudan.
America’s stockmarket reeled. Chinese
officials boasted that they now had the up-
per hand, citing the sell-off as evidence
that America’s trade war was a type of self-
harm. But the Chinese government seemed
desirous of limiting the fallout. Domestic
media barely mentioned a tweet by Mr
Trump in which he called the Chinese pres-
ident, Xi Jinping, an “enemy”.
Over the next couple of days Mr Trump
softened his rhetoric, emphasising “mean-
ingful talks” with China. He trumpeted
progress towards a trade deal with Japan,
which negotiators hope to seal in Septem-
ber. Robert Lighthizer, the United StatesTrade Representative, said it would cover
industrial tariffs, digital trade and agricul-
ture. The element that seemed to excite Mr
Trump most was a Japanese promise to en-
courage firms to buy American corn.
Trade tensions with the European Un-
ion also eased a little. A French tax on digi-tal services, imposed in July, had triggered
an investigation into whether American
businesses were being unduly burdened.
Mr Trump had threatened retaliatory tariffs
on French wine. But officials hashed out a
deal to avoid tit-for-tat measures, in which
the French reiterated that they would re-
move the tax once a multilateral equivalent
had been agreed and was in place, and add-
ed that they would refund companies any
difference between the unilateral measure
and any eventual replacement.
Mr Trump is likely to take away from his
hectic week the message that he has more
leverage to reshape trade than his critics
claim. Details of what was agreed during
the g7 weekend are scant, but it seems that
the Japanese and French both gave ground
under the threat of American tariffs. It
would be wrong, though, to infer that the
Chinese will also do so, not least because
what America is demanding of them is
vastly greater. Moreover, for all Mr Trump’s
sporadic boasts of being dealmaker-in-
chief, his truces tend to be temporary. 7WASHINGTON, DC
Donald Trump’s trade battles show no
signs of endingTradeFog of war
EscalationSource: Peterson Institute for International EconomicsTariffs on exports, %2018 2019051015202530Chinese tariffs
on US exportsUS tariffs on
Chinese exportsForecastT
he commentscame in thick and fast
on Douban, a social network popular
with film buffs and bookworms. More
appeared on Weibo, a microblogging
website, where the hashtag #American-
Factory has gained more than 16m views.
The documentary of that name, by a
film-making couple from Ohio, was
released on August 21st on Netflix. The
American firm’s streaming service is not
available in China, but pirated copies of
the film have proliferated. Strikingly, it
has drawn praise—even as the Sino-
American trade war stokes nationalist
feelings within China.
That reception is partly a testament to
the faultlessly balanced take of “Ameri-
can Factory”, shaped by 1,200 hours of
rare footage. Much was shot inside a
plant in Dayton, Ohio, which was taken
over in 2014 by Fuyao, a Chinese glass-
making giant that supplies the global car
industry. In 2008 General Motors had
closed its complex there, so for jobless
local people Fuyao’s arrival was a mir-
acle. Before long, however, Stakhanovite
bosses clashed with a restive and out-
spoken factory floor. The film is a parable
of modern manufacturing, showing the
strengths and weaknesses of each coun-
try. For Chinese viewers, the failings of
theirs hit home.
“It was hard to watch,” wrote a user on
Douban. “Who does not know that Chi-nese efficiency is driven by depriving
workers living at the bottom of society of
their health, safety and dignity?” Another
comment came from the city of Fuqing,
Fuyao’s base, to which American manag-
ers are taken to be trained in Chinese
factory-floor culture (they are alarmed to
see workers crouched on mountains of
shards, sorting them for recycling, and
bewildered by the militaristic morning
roll-calls and 12-hour shifts). “The scari-
est thing is that we have grown used to
this,” wrote the native of Fuqing, ponder-
ing whether to feel pride or sorrow at
management methods like Fuyao’s.
Young Chinese have begun to resist
them. Earlier this year engineers in the
cut-throat technology industry led a rare
online labour movement to protest
against the “996” regime (a de facto work
schedule of 9am to 9pm, six days a week,
often without extra pay for those extra
hours). Last year students and activists
joined protests by factory workers at
Jasic, a maker of welding machinery in
Shenzhen.
Their gripes were poor working con-
ditions and firings after some had tried
to unionise—something that in America
Fuyao fought tooth and nail, and suc-
cessfully, to block. “American Factory”
depicts a collision between two working
cultures. But worries about the plight of
blue-collar workers unite them.Reflecting back
Blue-collar workersSHANGHAI
An American documentary about labour rights strikes a chord in China