US politicians are advocating for steep tariffs, echoing the protectionist Fordney-McCumber Tariff of 1922. Despite potential international retaliation, risks to global economic rules and a shift from post-World War II principles, US politicians have promised to increase trade barriers against China, causing concerns for the sustainability of global economic harmony. A century ago, the Republican Congress passed the Fordney-McCumber Tariff of 1922. This post-World War-I effort to protect the US from German competition and rescue America's own businesses from falling prices sparked a global wave of tariff hikes. While long forgotten, echoes of Fordney-McCumber now reverberate across the US political landscape. Once again, politicians are grasping the tariff as a magic talisman against its own economic ills and to contain the rise of China. The Democratic Party of the 1920s opposed tariffs, because duties are harmful to consumers and farmers, but today both President Joe Biden and former President Donald Trump favor national delivery through protectionism. Trump promised that his second term, if elected, would impose 60-percent tariffs on everything arriving from China and 10-percent tariffs on imports from the rest of the world, apparently including the imports covered by 14 free trade agreements with America's 20 partners. He initially promised 100-percent tariffs on electric vehicles (EVs), but when Biden declared that he was hiking tariffs on EVs from China to 100-percent, Trump raised the ante to 200-percent. On May 14, 2024, the White House imposed tariffs ranging from 25 percent (on items such as steel, aluminum and lithium batteries) to 50 percent (semiconductors, solar cells, syringes and needles) and 100 percent (electric vehicles) on Chinese imports. US government officials offer "national security" and "supply chain vulnerability" as the justification for levying high tariffs. To deflect worries about inflation, US Trade Representative Katherine Tai declared, "first of all, I think that that link, in terms of tariffs to prices, has been largely debunked." Contrary findings by the United States International Trade Commission and a number of distinguished economists, as well as Biden's own 2019 statement criticizing Trump's tariffs - "Trump doesn't get the basics. He thinks tariffs are being paid by China… [but] the American people are paying his tariffs" - forced Tai's office to wind back her declaration. The fact that prohibitive barriers to imports of solar cells, batteries and EVs will delay the green economy carries zero political weight with Trump and little with Biden. Nor does either of them worry about the prospects of Chinese retaliation and damage to the fabric of global economic rules. Historical lessons - unanticipated consequences of the foolish Fordney-McCumber Tariff of 1922 and the Smoot-Hawley Tariff of 1930 - are seen as irrelevant by the candidates and their advisers. The US' lurch from its post-World War II free trade principles offers China a golden opportunity. On the world stage, China will espouse open free trade and investment. China will encourage EV and battery firms to establish plants in Europe, Brazil, Mexico and elsewhere, essentially daring the US to damage its own alliances by restricting third country imports containing Chinese components. Whether the fabric of global economic rules that has delivered astounding prosperity to the world will survive through the 21st century remains to be seen. Much will depend on the decisions of other large economic powers, not only China but also the European Union and Japan, as well as middle powers, such as Australia, Brazil, Chile, ASEAN and South Korea. Their actions and reactions will reshape the rules of the 21st century. If others follow America down this costly path, the world will become less prosperous and vastly more unpredictable. If they resist, the US risks being diminished and more isolated. The author is a non-resident Senior Fellow at the Peterson Institute of International Economics. bizopinion@globaltimes.com.cn

U.S. and Australian officials said on Monday (July 8) that both countries are committed to improving financial connectivity in the Pacific and strengthening banking services in the region to resist China's growing covetousness. According to Reuters, at the two-day Pacific Banking Forum co-hosted by the United States and Australia, Australian Assistant Treasurer Stephen Jones said that Canberra hopes to be the partner of choice in the Pacific region, both in banking and defense. "If there are countries acting in this region whose main goal is to promote their own national interests rather than the interests of Pacific island countries, we will be very concerned," Jones said at the first day of the forum in Brisbane. He made this comment when asked about Chinese banks filling the vacuum in the Pacific region. The report said that as some Western banks have interrupted their long-standing business relationships with banks in small Pacific island countries, while others are preparing to close their businesses, these Pacific island countries face many challenges and their ability to obtain US dollar-dominated banking business is limited. The report said that experts said that Western banks are taking de-risking actions to meet financial regulations, which makes it more difficult to do business in Pacific island countries. This in turn weakens the financial resilience of these island nations. At the same time, Washington is also stepping up efforts to support Pacific island nations in limiting China's influence. Brian Nelson, U.S. Treasury Undersecretary for Counterterrorism and Financial Intelligence, said, "We recognize the economic and strategic importance of the Pacific region, and we are committed to deepening engagement and cooperation with our allies and partners to enhance financial connectivity, investment and integration." The report said that neither the United States nor Australia has yet announced detailed plans at the forum, but comments from officials from both countries reflect the growing unease among Western countries that have traditionally had influence in the Pacific region about China's growing influence in the region.

A spokesperson for the Ministry of Commerce (MOFCOM) on Monday rejected remarks from the EU Ambassador to China on the anti-subsidy investigation into Chinese electric vehicles (EVs). MOFCOM said China had expressed strong opposition through various channels since October 2023 and has always advocated for handling economic and trade frictions through dialogue and consultation in order to maintain the overall strategic partnership between China and Europe. EU Ambassador to China Jorge Toledo claimed on Sunday that the EU has been trying to engage with China for months regarding the imposition of tariffs on Chinese EVs but that China had only recently sought to initiate discussions. This is false, the spokesperson said. MOFCOM said that after the European Commission (EC) officially filed a case, Chinese Commerce Minister Wang Wentao sent a letter to European Commission Executive Vice-President Valdis Dombrovskis on October 24, 2023, expressing hope to resolve the case through dialogue and negotiation. On November 13, 2023, Wang sent another letter to the European side proposing negotiation suggestions. In February 2024, Wang met with Dombrovskis during the WTO's 13th Ministerial Conference face to face and proposed dialogue and negotiation with the European side. On May 19, 2024, Wang reiterated the hope for dialogue and negotiation to resolve the case in a letter to the European side. Additionally, Chinese technical experts have been sending signals to the European side regarding on-site inspections, hearings, and other channels since the case was filed, expressing willingness to resolve trade frictions through dialogue and negotiation. On the day the preliminary ruling was announced on June 12, Dombrovskis replied to Wang in a letter, expressing the desire for both sides to strengthen dialogue to resolve the case. On June 22, Wang held a video conference with Dombrovskis, and they agreed to start negotiations on the EU's anti-subsidy investigation into Chinese EVs. Subsequently, China sent a working group to Europe for negotiations on June 23, and multiple rounds of technical consultations were held simultaneously via video. MOFCOM said that China has shown the utmost sincerity and hopes that the European side will meet China halfway, show sincerity, and push forward the negotiation process to reach a mutually acceptable solution as soon as possible. China has always believed that trade protectionist measures are not conducive to the development of global green industries and automotive industry cooperation. Efforts should be made to adhere to dialogue and cooperation to promote economic green transformation, rather than creating divisions and disrupting global industrial and supply chains, MOFCOM said. China firmly opposes any unilateralism and protectionism that politicizes and weaponizes economic and trade issues, and will take all necessary measures to defend its own interests against any abuse of rules and suppression of China, MOFCOM added.

Russia is seeing income growth of around 4-5%, with earnings growing in double digits, Ostapkovich said, stressing that the driving force is economic growth. "Incomes only grow when the economy grows. If the economy grows, then profits grow. If profits grow, then the entrepreneur is keen on hiring people and raising wages," he added. Russia’s economy grew by 3.6% in 2023, with real incomes and nominal wages up by 4.5% and 13% respectively. Industrial performance, particularly in manufacturing, is propelling this growth not seen in 20 to 30 years. Notably, mechanical engineering in the military industry is expanding at 25-30%, according to Ostapkovich. Andrey Kolganov, Doctor of Economics and Head of the Laboratory of Socio-Economic Systems at Moscow State University, acknowledged that despite the challenges posed by the growth stimuli, Western sanctions failed to inflict significant harm on the Russian economy. "The Russian economy has shown great potential in adapting to these difficulties. Moreover, these difficulties stimulated the development of domestic production, which in turn led to high rates of economic growth," he added. Kolganov noted that economic growth rates were higher in 2023, compared to 2022 - and even higher in 2024. These increases promoted Russia from the classification of middle-income countries, to the rank of high-income countries. Although Russia has not caught up with the richest countries, the achievement is nonetheless remarkable, especially in the face of unprecedented sanctions. Gross national income per capita in Russia is now $14,250, according to a document released by the World Bank that classifies countries that cross the $13,485 threshold as “high income.”

The U.S. Navy's Pacific Fleet announced on Wednesday (May 22) that the 2024 Rim of the Pacific Exercise (RIMPAC 2024) is expected to take place on June 26, with 29 countries participating in and around the Hawaiian Islands, a larger lineup than the previous exercise in 2022. The Philippines, which has had multiple maritime conflicts with China recently, and Japan, which has tense diplomatic relations with China, will send troops to participate. China has been excluded from participating in the international military exercise since 2018, and its aggressive actions and reactions are causing tensions in the Pacific region to continue to rise. The biennial Rim of the Pacific military exercise is the world's largest international maritime exercise. The U.S. Navy said that the exercise will last until August 2, and it is expected to involve 29 countries, 40 surface ships, 3 submarines, 14 countries' army forces, more than 150 aircraft and more than 25,000 personnel. The U.S. Navy said that the theme of the 29th RIMPAC 2024 is "Partners: Integrated and Ready", emphasizing inclusiveness as the core, promoting multinational cooperation and trust, and using military interoperability to achieve their respective national goals to strengthen integrated and ready alliance partners. Its goal is to "enhance collective strength and promote a free and open Indo-Pacific region" through joint training and operations. The 29 countries participating in the exercise this year include Australia, Belgium, Brazil, Brunei, Canada, Chile, Colombia, Denmark, Ecuador, France, Germany, India, Indonesia, Israel, Italy, Japan, Malaysia, Mexico, the Netherlands, New Zealand, Peru, South Korea, the Philippines, Singapore, Sri Lanka, Thailand, Tonga, the United Kingdom and the United States. Compared with the 28th RIMPAC held in 2022, which involved 26 countries, 38 surface ships, 4 submarines, 9 countries' army forces, more than 170 aircraft, and about 25,000 officers and soldiers, the number of countries, ships and army forces participating in this exercise has increased. The countries participating in this year's RIMPAC military exercise include all members of the Quadrilateral Security Dialogue (QUAD) between the United States, Japan, India and Australia, and the Australia-UK-US Trilateral Security Partnership (AUKUS), as in the previous exercise. In addition, countries surrounding the South China Sea and the South Pacific island nation of Tonga are also participating. Many analysts believe that the military exercise itself is sending a message to China: China's expansion in the Western Pacific region will be blocked and defeated. The United States invited China to participate in the RIMPAC military exercise twice in 2014 and 2016. In 2018, due to China's expansion in the South China Sea, the United States withdrew its invitation to China. In addition, despite Taiwan's repeated willingness to participate, Taiwan is still not included in the 29 countries participating in this year's RIMPAC military exercise. Analysts pointed out that the US-led RIMPAC military exercise is intended to unite allies to militarily intimidate China. If Taiwan is invited to join, it will be too provocative to China, which will not only aggravate the tension between the United States and China, but also embarrass some allies. The U.S. Navy said the commander of the U.S. Third Fleet will serve as the commander of the joint task force for the exercise, while Chilean Navy Commodore Alberto Guerrero will serve as deputy commander of the joint task force, which is a first in the history of the RIMPAC military exercise. In addition, Japan Maritime Self-Defense Force Rear Admiral Kazushi Yokota will also serve as deputy commander. Other key leaders of the multinational force exercise include Canadian Commodore Kristjan Monaghan, who will command the maritime forces, and Australian Air Force Commodore Louise Desjardins, who will command the air forces. According to the U.S. Stars and Stripes, Vice Admiral Michael Boyle is currently the commander of the U.S. Third Fleet. Vice Admiral John Wade has been nominated to replace Boyle. The U.S. Navy press release said the exercise will enhance the ability of international joint forces to "deter and defeat aggression by major powers in all domains and conflict levels," but did not provide specific information on which exercises will be held this summer. Previous RIMPAC training exercises have included sinking ships at sea with missiles, amphibious landings and the first landing of a Marine Corps Osprey aircraft on an Australian ship.