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“It’s a bit like trying to kill a termite with a stick of dynamite”
Dimitar Gueorguiev, assistant professor of political science at the Maxwell School and who teaches courses on Chinese politics and foreign policy, is available to speak about the ongoing issues related to US tariffs on Chinese goods.
His work and research on China cover a broad range of topics broadly connected to governance and public relations. He is a co-author of the new book China’s Governance Puzzle. Enabling Transparency and Participation in a Single-Party State and currently working on another book that compares Chinese quasi-democratic institutions to their fully democratic counterparts.
His comments are below:
Will tariffs benefit American consumers or businesses?
- “Most likely no. Definitely not consumers, who benefit from cheaper goods. We have not seen the list of affected products, so its hard to speculate on which businesses may benefit. One guess is that, much like steel tariffs, they target producers in electoral swing-states like Pennsylvania and Ohio.
Will tariffs hurt Chinese producers?
- “Yes, but not that much. Most Chinese exports to the US come from complex production chains, with value-added coming from multiple countries (many of which are strategic and economic partners with the US such as South Korea and Japan, for example) so the tariffs will spread the pain broadly. It’s a bit like trying to kill a termite with a stick of dynamite.”
How dangerous is the risk of a trade war?
- Very high, and also very low.
- “Last night, China responded with the ‘possibility’ of $3 billion in tariffs on US goods. This is tiny compared to the 60 billion number outlined by the White House. This is perhaps the lowest number they could have chosen to save face with Chinese public opinion.”
- “Unlike Chinese exports to the US (which involve convoluted multinational production chains), US exports to China are much simpler, such as agriculture goods. In short, whereas US tariffs on Chinese goods messily spread the pain across many countries, Chinese retaliation could surgically target Iowa and Illinois. In other words, China wins when it comes to retaliation.”
- “Beijing, however, unlike the White House is playing a long game and they have bigger fish too fry. Last Tuesday, premier Li Keqiang unilaterally announced China would not retaliate with a tit-for-tat trade war, and will uphold the mantle of free trade. That does not mean China will not reciprocate with pressure on the US by other means.”
Will tariffs change Chinese behavior?
- “In some sense they already have. Li Kejiang’s statement on Tuesday also promised to respect IP. Li also announced that new sectors will be further opened to foreign investment and imports, which was a clear nod to the US. In short, China has already promised to fix the problems the White House is pointing too. That is, the threat was quite effective. So why is the administration is making good on a successful threat!? Domestically, I think its about optics. Internationally, however, it signals a complete disregard for diplomacy and reciprocity.”
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