In a move that has escalated the trade war and is almost certain to cause China to retaliate, United States President Donald Trump announced that even more tariffs will be imposed on US$200 billion (S$275 billion) worth of goods from China starting next week. Furthermore, the President also announced that he is prepared to tax all imports.
Mr. Trump made this announcement on Monday, September 17, no doubt buoyed by how well the US economy is doing in comparison to China, which is suffering economic losses.
The trade war between the two largest economies in the world is waging fiercely and the US President shows no sign of letting up, as he announced he is ready to impose tariffs on yet another US$267 billion worth of imports should China take “retaliatory action against our farmers or other industries.”
The tariffs scheduled for next week are in addition to US$50 billion worth of goods, which means that almost half of all the imports from China to the US will be facing levies. The new tariffs are set to take effect on Monday, September 24, beginning at 10 percent and then going up to 25 percent on January 1, 2019, lessening the blow on this year’s Christmas shoppers who will be buying Chinese imports.
Mr. Trump said, “For months, we have urged China to change these unfair practices, and give fair and reciprocal treatment to American companies. We have been very clear about the type of changes that need to be made, and we have given China every opportunity to treat us more fairly. But, so far, China has been unwilling to change its practices.”
The aim of the tariffs is to pressure Beijing to modify certain trade practices that the US President claims is detrimental to businesses in the US at a time when the US clearly has the upper hand in this trade dispute. China’s economy has been sluggish, with spending on infrastructure going slowly, while in the US employment is at its lowest in a long time. And, as US tariffs increase, China’s economic situation is expected to grow even more bleak.
Officials of the Trump Administration say that if China agrees to the US demands, which include no longer sharing technology with Chinese business partners, which is currently required, as well as giving American businesses bigger access to China’s markets. Negotiations will only proceed if China will seriously consider these demands.
While China will no doubt feel the pain of the new tariffs, everyday consumers will also be affected by them, since they will be followed by higher prices of ordinary commodities such as food, electronics, housewares and tools.
Companies in the US have already said that these new tariffs could hamper their growth, profit and hiring. Six days of public hearings were held wherein businesses said that the US could no longer produce goods to replace the Chinese imports that would be affected by the tariffs. Economists have sounded the alarm that these tariffs could also hurt the US economic growth.
And it looks like there is no light at the end of the tunnel quite yet for the continuing trade dispute between the US and China. While talks are scheduled, no progress is expected since it is unclear if representatives from Beijing will even show up if the new tariffs take effect.
The deputy director for economic affairs at the Communist Party’s top advisory body, Yang Weimin, said that China will not bow to pressure from Washington, and trade analysts are apprehensive as to whether the US President’s most recent moves will just cause more confrontations.
Cornell University economist, Eswar Prasad, who specializes in trade issues said, “Washington’s view seems to be that tariffs and threats of more tariffs will soften up the Chinese and make them more amenable to negotiations. The evidence that, in response to US bullying tactics, China just stiffens its spine and strikes back with proportionate tariffs against US imports has had no discernible effect on the Trump administration’s take-no-prisoners approach to this rapidly escalating trade war.”