World Economy

Global trade expert: US may increase tariffs on China, but there won't be a trade war

Eustance Huang, Special to CNBC
China has 'resigned' itself to bluster

President Donald Trump has been a vocal critic of U.S.-China trade relations since his days on the campaign trail, often calling for a stronger stance against Beijing.

That rhetoric led many analysts to suggest a trade war between the world's two largest economies could be on the horizon, and it would have major global ramifications. But, Alex Capri, an expert on international trade and a visiting senior fellow at the National University of Singapore's business school, told CNBC that such a trade war is unlikely — although an increase in certain kinds of tariffs on Chinese products could well occur.

Speaking with CNBC's "Capital Connection" on Monday, Capri said "there will be an increase in anti-dumping duties, there will be an increase in countervailing duties levied against Chinese products."

Still, he said, "it's unlikely that we will see an across-the-board tariff of 45 percent across a whole suite of Chinese products."

Capri stressed that it would be unlikely for a trade war to break out between the nations as such a move would be unlikely to benefit anyone.

He did, however, caution against possible retaliation by the Chinese government if the U.S. decided to take actions on trade which Beijing deems too drastic or unfair. U.S. businesses would obviously be concerned by the prospect of retaliation, Capri added, as many are already facing difficulties in China.

"[The Chinese government] could certainly make business much more difficult for companies on the ground in China, and it's not exactly easy for them now as is," Capri said.

Capri's comments come ahead of a much-anticipated first meeting between Trump and Chinese President Xi Jinping at Trump's Mar-a-Lago resort in Florida later this week. There, Capri predicted, "the Chinese will come into this meeting looking to establish 'harmonious' relationship" with the U.S.

When asked about the possibility of the U.S. Treasury labeling China a currency manipulator, Capri said that it was an improbable scenario as it was not in Beijing's interest to deliberately devalue the yuan.

"I think the long term plans for China, if you look at their 5-year plan to develop in terms of high technology — you know, the China 2025 plan — the renminbi is a very important part of that," he said. "They want the renminbi to be a major currency for trade, for transactions, so it's not really in their interests, medium-term, to devalue it."

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