The US administration of Donald J. Trump has upped the ante in its rapidly unfolding trade war with China after announcing an additional 10% import tariff on $200 billion worth of Chinese goods, which will increase to 25% beginning on January 1.
By delaying the full implementation, the Trump administration is hoping that US manufacturers such as Apple and Hewlett Packard will have time to prepare for the potentially catastrophic disruption of their value supply chains.
The latest announcement is the biggest wave of tariffs that Trump’s protectionist White House has slapped on a major trading partner. The move will target consumer goods ranging from furniture to computer routers.
Prior to the latest announcement, China vowed to introduce retaliatory tariffs on an additional $60 billion worth of US exports, a potentially crippling move for American companies. Beijing has already imposed reciprocal targeted retaliatory tariffs on $50 billion worth of US goods. But the Chinese tariffs are not symmetrical, as Beijing enjoys a longstanding trade surplus with the United States.
Trump took to his usual platform, Twitter, to praise the new tariffs policy suggest, without any statistical data to support his claim, that his approach to trade created jobs and that the new round of punishing tariffs had “unnoticeable” economic side effects and warned that other countries may also be “tariffed” (sic).
Tariffs have put the U.S. in a very strong bargaining position, with Billions of Dollars, and Jobs, flowing into our Country – and yet cost increases have thus far been almost unnoticeable. If countries will not make fair deals with us, they will be “Tariffed!”
— Donald J. Trump (@realDonaldTrump) September 17, 2018
Trump has warned that any Chinese retaliation would automatically trigger a third round of tariffs worth $267 billion on additional imports.
During a World Economic Forum panel in the Chinese city of Tianjin, an official from Beijing told Bloomberg that the estimating the cost of the US’ sanctions could amount to 0.7% of China’s GDP.
White House economic adviser Larry Kudlow indicated that Trump may want to resolve the current crisis by meeting face-to-face with Chinese President Xi Jinping at the United Nations General Assembly later in September or the G20 summit in Argentina on November 30.
The ongoing trade war with China could have significant political implications for Trump ahead of key congressional elections in November. The US’ powerful farming lobbies are already campaigning against that the escalated tensions with Beijing have severely affected their workforce, many of whom make up the Republican base.