Possible trade war couldn’t come at a worse time for US, says Alibaba co-founder

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Joseph Tsai (left), co-founder and executive vice-chairman of Alibaba Group, talks with Zhang Yong, CEO of Alibaba. Photo: AFP

The never-ending cycle of reality TV-esque suspense coming out of the White House continues this week, as a delegation of White House officials travels to Beijing in an effort to avert the elusive all-out trade war some have feared since the current US president took office.

Late on Monday, the administration of US President Donald Trump delayed a decision on imposing tariffs on metals imports from key allies, while granting others permanent exemptions. The move came at the eleventh hour, ahead of the Tuesday deadline for the tariffs to go into effect, prompting sighs of relief from exasperated businesses and investors. While many expect Trump eventually to back off policies that economists warn could do immense harm to the economy, he has followed through on just enough threats that some degree of uncertainty remains, making it hard for businesses to prepare.

The same considerations are being made ahead of a deadline in June for tariffs on US$50 billion worth of Chinese imports to be imposed. A threat of tariffs on an additional $100 billion worth of goods has yet to be backed up with a formal proposal. Beijing has assured that it will make good on their its of retaliating in kind.

Alibaba co-founder Joseph Tsai makes a strong case for why we might see a last-minute plot twist in this episode of “who wants to start a trade war?”

“The trade war comes at a very ironic time,” Tsai said, speaking on CNBC.

“There are now 300 million Chinese consumers that are demanding and desiring to buy from all over the world, so there’s a great opportunity for producers from America, from Europe, to sell to China, and access this large consumer base,” he said.

Tsai added that US businesses were already hurting.

“It’s already happening, and it’s because soon after the US put on tariffs on some Chinese products, China felt that it had no choice but to retaliate,” he said.

The potential damage to US economic prospects would also come at a bad time politically, as the Republican Party faces midterm elections. Polls show that voters approve of Trump and the Republicans’ handling of tax policy and the economy, a strong point that could ensure they keep the Senate and may give them a chance to retain the House of Representatives. Losing either chamber would increase scrutiny of Trump and could hamstring the administration’s policy agenda. Don’t be surprised if we see another eleventh-hour tariff delay.

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