President Donald Trump has imposed a 25% tariff on Chinese goods worth $50 billion. The tariffs will affect nearly 800 products, and are expected to come into full effect on July 6th. The first round will affect goods worth $34 billion. The White House says that it is still consulting on the other $16 billion in goods from China. The President also warned China against retaliation saying that he will slap more tariffs if they do. However, China has made it clear that it will retaliate.
Trump said that the tariffs were “essential in preventing the unfair transfer of technology property from the US to China.” The President claims that the tariffs will help protect American jobs. Some of the key Chinese products hit by the tariffs include aircraft tires, turbines, and commercial dishwashers.
Stock markets in the US and Europe didn’t react well to the announcement. They both fell in Friday trading as investors are afraid of a possible trade war between two of the largest economies in the world. China responded to the White House announcement with a threat of its own tariffs. Beijing confirmed that it will take countermeasures of the “same scale and same strength.” It’s very likely that the Asian country will target US farm produce and aircrafts.
A spokesman for the Chinese Foreign Ministry told reporters that if the US decides to take unilateral protectionist measures that affect Chinese interests, then Beijing will have no option but to respond in the same way. The foreign policy spokesman also warned that the new tariffs will void all the trade talks between the two countries that have been going on over the last few months.
Trump has often accused China of unfair trade practices, especially when it comes to intellectual property. The White House wants Beijing to stop these policies. For instance, all foreign companies that want to enter the lucrative Chinese market must share ownership of their company with local Chinese firms. This requirement has been vigorously protested by the Trump administration.
However, economists are skeptical of how effective the tariffs will be. Some have even argued that they may end up hurting the same industries the President is trying to protect. US farmers, most of whom are part of the Trump’s support base, may be in the line of fire if China decides to retaliate. Economists estimate that the US GDP will lose half a percentage if the protectionist trade policy escalates into a trade war. The measures could also lead to higher prices for US consumers and job losses.
The White House had announced last spring that it was considering imposing tariffs on Chinese goods after an investigation into Chinese intellectual property practices. The investigation published a list of about 1,300 Chinese products that would be targeted. This list has since been reduced to 1,100. The White House has maintained that the tariffs will not hurt US consumers in any way. The Trump administration will also give companies affected by the tariffs a chance to apply for exemptions. The tariffs will definitely get mixed reactions across the US political scene but it looks like Trump is not backing down anytime soon.