During his campaign, President Donald Trump made it very clear that he was planning on implementing tariffs on multiple countries, with the goal of putting American goods and consumers first. Now that he is in office, Trump has paused his plans to put tariffs on goods from Canada and Mexico. However, tariffs with China are a different story.
Counter Tariffs from China
China announced Tuesday that due to Trump’s tariffs on Chinese products, China will be implementing counter tariffs on multiple US goods. China also announced an antitrust investigation into Google and other trade measures on US companies. These counter tariffs and investigations certainly are raising tension between the two largest economies in the world.
President Trump and Chinese President Xi Jinping are expected to meet in the next few days to address the trade war. Some experts claim that Trump’s tariffs are a threat to US economy stability and expected these counter tariffs. On Tuesday China announced it would implement a 15% counter tariff on coal and natural gas products. China also plans on implementing a 10% tariff on crude oil, agricultural machines are large engine cars from the US. These counter tariffs are expected to be implemented Monday, February 10th.
While this may mean prices will increase for both Chinese and American consumers, the tension and action taken by both countries is capturing lots of attention. In a statement from the State Council Tariff Commision, the council said “The US’s unilateral tariff increase seriously violates the rules of the World Trade Organization”, as well that “it is not only unhelpful in solving its own problems, but also damages normal economic and trade cooperation between China and the US.” After that statement, Beijing said it would file a complaint with the WTO over “malicious levies.”
Impact on China
China is the worlds leading importer of natural gas, and the US is the largest exporter of natural gas. However, the two don’t trade much together, at least in terms of natural gas. China primarily imports natural gas from Australia, Qatar, and Malaysia. Most Chinese consumers won’t be significantly impacted by oil prices because other countries supply much of their gas.
Experts claim that China’s counter tariffs can harm the US economy as well as the rest of the world.
In 2018, China engaged in a trade war with Trump, and many analysts claim that China is much better prepared this time to counter. Philip Luck, former State department official and director at the Center for Strategic and International studies, said “They have a much more developed export control regime. We depend on them for a lot of critical minerals… So… they could put some significant harm on our economy.”
Stephen Dover, chief market strategist and head of the Franklin Templeton Institute said, “I don’t think they want the trade war escalating… and they see (the) example from Canada and Mexico and are hoping for the same thing.” Dover quickly added, however, “a risk is that this is the beginning of a tit-for-tat trade war, which could result in lower GDP growth everywhere, higher US inflation, a stronger dollar and upside pressure on US interest rates.”
What do you think about the trade war going on? Who will “win” between the US and China? Let us know in the comments.
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