Trump's China Trade War Just Escalated by $16 Billion

Glen Norman
August 8, 2018

Trump, who has boasted that trade wars are "easy to win", has threatened to ramp up the pressure and slap tariffs on virtually all of China's exports to the United States if Beijing does not back down and take steps to reduce the $335 billion U.S. trade deficit with that country. US President Donald Trump accused Beijing of "being vicious" on trade, stressing that Chinese measures were targeting US farmers on objective. It represents the latest salvo in the ever-expanding trade war between the U.S. and China.

The US levied 25% duties on $34 billion in Chinese goods on 6 July, prompting swift in-kind retaliation from Beijing.

Still, disagreements between the two major economic powers run deeper than just the trade balance and tensions remain over market access, intellectual property, technology transfer and investment. Beijing is expected to hit $16 billion worth of USA goods with equal tariffs in response to Tuesday's move.

"We expect export growth to cool in the coming months, though this will primarily reflect softer global growth rather than USA tariffs, the direct impact of which will continue to be mostly offset by the renminbi's (yuan's) recent depreciation".


"[The] trade data don't show any significant impact from the first round of U.S. tariffs", Julian Evans-Pritchard, senior China economist at Capital Economics, said in a note to investors.

The Trump administration has maintained that the tariffs are necessary to force China into changing economic behavior it says harms the US.

And the conflict is likely to escalate: The administration is preparing tariffs of up to 25 percent on an additional $200 billion in Chinese products.

Economists warn that a prolonged trade war between China and the USA could end up increasing prices for American consumers and hurting United States businesses.


His administration confirmed that its trade assault would soon cover more than $50 billion of products from China.

Trump has threatened to levy a 25% tariff on an additional $200 billion worth of Chinese imports to the USA - a move that would blow open the disagreement between the countries. Customs will begin collecting the duties on 279 product lines, down from 284 items on the initial list, as of 23 August, the US Trade Representative's Office said in an emailed statement on Tuesday.

USA industries and farmers have been caught in the crossfire, and the Trump administration announced $12 billion in aid to help farmers hurt by duties on crops such as soybeans.


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