Trump has declared a prolong war on China and once again he is not concerned about the consequences.
The world’s two biggest economies China and the United States are tangled deeply into a trade war. President of the United States of America has ranched up the tensions further by declaring that he is ready to impose another 10 percent tariffs on about $200 billion in Chinese goods in the coming week and this tariffs will be more than double next year. Basically, Trump has declared a prolong war on China and once again he is not concerned about the consequences.
This is obviously not the first time the president is playing this kind of hardball with China. The US has imposed tariffs on China twice this year and there has been a tit-for-tat reaction from China. However, this time, the president had adopted an even tougher stance and he has left no room for such tit-for-tat reaction.
Mr Trump has announced if Beijing hits back with counter-tariffs then the reaction will be even harsher from the US. Previously, China has vowed that it will go after the US farmers and industry. In addition to this, Beijing also said that it will target liquified gas to aircraft and total number can stand at $60 billion in tariffs on the US. Nonetheless, Trump has factored this element in a recent statement and he is determined to take immediate action against China if the country retaliates. That would result in further tariffs on about $267 for Chinese imports.
Just to fill in the blanks, to total US import of Chinese goods in 2017 was $506 billion and total Chinese imports of US goods in 2017 was $130 billion. So, there is no way that China can win this war by playing the dollar for dollar tariffs game alone, it would have to use other weapons at its disposal such as putting tariffs on US services or making the trading environment difficult for US companies to operate in China. Also, worth mentioning here is that the trump administration has already imposed tariffs on Chinese goods earlier year in July and August and both times china as retaliated bu equal tariffs on the US.
China cannot be strong-armed by the US and this was the message from the vice chairman of China’s securities regulatory commission. If the US goes ahead in full steam and puts tariffs on all Chinese products, the economy may lose up to 0.7% of GDP as a direct result of this. This isn’t the most significant number and some of this loss in GDP will be covered by increasing and developing new relationships.
But in the short term, there is no doubt that the impact on the sentiment is going to be far larger than the actual impact on the GDP. This increase in tariffs will have an impact on Amercian consumers as the cost of their everyday living will start to soar.
