Chapter 1: What is the main topic discussed in this episode?
Breakfast Business with Enterprise Ireland on Newstalk.
Chapter 2: What recent tariff changes did Trump impose on Chinese goods?
Those who thought that Trump's tariff wars had died down a bit were given a rude awakening at the weekend when he slapped a new 100% tariff on all Chinese goods. Although he softened his tone two days later, Trump didn't cancel them.
On top of that, there's a risk, though, of China taking retaliatory action against European companies after the Dutch government effectively expropriated a Chinese semiconductor company, which it accused of intellectual theft. So lots to talk about with Finbar Birmingham, the Europe correspondent of the South China Morning Post, who's on the line. Good morning, Finbar.
Good morning, Joe.
Now, Finbar, let's start with China's reaction to this 100% tariff threat. The usual response or relatively muted, would you say?
Well, the response to the 100% threat, nothing so far. I think that in the days since that, we've actually seen that both sides have softened their tone. But it's interesting, what did the 100% tariff threat come in response to? That was the big one from the Chinese. That was when China intervened. announced that it would tighten the curbs on the export of rare earth elements and magnets.
And this was really sweeping. It would mean that anybody who wants to export those, any product that had a trace of a Chinese rare earth anywhere in the world would have to require a license from Beijing. So that was huge. And that's when Trump then escalated with the 100%. So it's broader and it has many tentacles, this version of the trade war.
It's very asymmetric, going from tariffs to products and so on. They seem to be looking for an off-ramp. Trump seems to want his meeting with Xi Jinping in South Korea at the APEC summit in a couple of weeks. We don't really know where it's going, but we have seen these sort of patterns before.
Yeah. What we what we usually like, what Trump usually likes seeing after he's done his taco maneuver is to have the big set piece meeting, as you were saying, in which everybody shakes hand and he looks like the great dealmaker. I presume the November 1st deadline, which was set by Trump at the weekend, will be kicked into the long grass until we know a little bit more about that meeting.
We'll see. I mean, he has done that before. You know, the term taco, as you use, Trump always chickens out, although occasionally he has followed through. I mean, don't forget that earlier in his second term, we did have a period in which both sides had tariffs north of 100% on them and we saw a big fall away in trade.
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Chapter 3: How did China initially respond to Trump's 100% tariff threat?
We're still trying to figure this one out. I mean, it was dramatic over the weekend. A Chinese company called Wingtech, which bought a controlling stake in Nexperia, the Dutch chipmaker, in 2019, filed a notice quietly at the Shanghai Stock Exchange on a Sunday saying that the Dutch government had effectively... seized control of its asset in the Netherlands.
Now, it emerged later on Sunday evening, the Dutch government confirmed that they had used something called the Goods Availability Act, a very sort of obscure Cold War piece of legislation that's supposed to be reserved for emergency situations such as wartime. to allow it to protect the essential flow of certain goods. In this case, it was chips, semiconductors. We know how important they are.
We don't know yet quite why it did this. Was there a sense that the Chinese company was going to close the factory in the Netherlands and bring the chip making to China? Was there some sort of leakage of technology suspected? They're not the highest end of chips. So I was a bit skeptical about the IP angle. It's very, very interesting. It's very, very mysterious.
We're still trying to find out exactly what happened. But the one thing that was very interesting here is how quickly they moved. This is very unusual swiftness for a European government, which have been taking kickings all year for moving very slowly. So we'll see what happened exactly. But certainly it was an interesting development.
Given the fact that the Dutch cited EU law, can we expect Beijing to respond in kind by potentially seizing Dutch or even other European assets?
I don't know about that. I mean, they will respond of that, I'm sure. But China often responds asymmetrically. And this is something that Europe has always struggled with. We can't really do that because we're very legalistic. Whereas the Chinese could do anything in response. But if you're a Dutch business person working for one of the big companies, not ASML, the chip
equipment-making kit, because that's indispensable in China. They would be foolish to hit ASML, but there are plenty of other Dutch companies with business in China. I would be shifting nervously at this point because there is a... Yeah, Philips is one. There's several of ASM, which is another big chip-making company.
I mean, there's a number of them that still trade heavily and do business on the ground in China. So trying to second guess what they will do is tricky. You know, they have been playing this game for many, many years, this idea of asymmetric economic security. We're just getting to the table now, but they're the masters of this.
So we don't know what exactly they will do, but they will do something.
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