Trump Ratchets Up Trade War With China With No Resolution in Sight
The Trump Administration indicated yesterday that it plans to levy a 10% tariff on an additional 200 million dollars worth of Chinese goods entering the United States including such things as clothing, television parts, sporting goods, and home appliances. The tariffs would be implemented by August 30th and Americans would start to see price increases on a wide variety of products as early as this Fall.
In return China has promised to respond with its own list of tariff increases targeting US made products exported to China. US farmers and manufacturers will see the impact of those increases almost immediately as their Chinese customers cancel orders and source those products from other nations.
In announcing these new tariffs, the Trump Administration hopes to force Chinese President Xi Jinping to back down and make concessions on its trade practices. However, forcing Xi into a corner may backfire by increasing nationalist sentiment in China where Trump is widely viewed as initiating the conflict.
Bloomberg: “China is showing no signs of backing down and instead looks like it is preparing for a drawn out conflict,” said Scott Kennedy, deputy director of China studies at the Center for Strategic and International Studies in Washington. “China has a million and one ways to retaliate.”
Trump's escalation in the trade war is also rattling Republicans in Congress with the Fall mid-term elections on the horizon.
Bloomberg: House Ways and Means Committee chief Kevin Brady, of Texas, warned of “a long, multi-year trade war between the two largest economies in the world that engulfs more and more of the globe.”
“Despite the serious economic consequences of ever-increasing tariffs, today there are no serious trade discussions occurring between the U.S. and China, no plans for trade negotiations anytime soon, and seemingly little action toward a solution,” Brady said. Senate Finance Committee Chairman Orrin Hatch, of Utah, called the new levies “reckless” and not “targeted.”