China Retaliates with $60 Billion Tariffs
On Monday, US president Donald Trump announced more tariffs on Chinese imports. Specifically, a 10% tax on a $200 billion list of Chinese imports. The affected goods range from consumer products to manufacturing materials.
The new tariffs will also rise to 25% by January 1st, just to add insult to injury.
As expected, China retaliates by imposing tariffs on $60 billion of American-made goods. Will we see any agreement reached?
Well, they might have to reach an agreement, as China is running out of American goods to tax! The smaller retaliation amount of $60 billion to the US’s $200 billion reflects the trade imbalance between the two superpowers.
The Chinese Finance Ministry has said on its website that the latest tariff round is to ease “trade friction” and the “unilateralism and protectionism of the United States.” But perhaps it doesn’t want to admit it is running out of taxable US assets.
None-the-less, the new list of tariffs affects 5,207 types of US imports ranging from coffee to farm machinery. (“Anything American” if you ask me.) Goods will be taxed at a rate of 5% and 10%, which will come into effect on September 24th.
Is Trump Playing a Game?
Trump’s reasoning behind the new tariffs is to force a renegotiation of current trade deals. He and his supporters view the current arrangements as unfair to American economic and security interests.
However, the Chinese Commerce Ministry is saying that Trump is creating an “economic emergency,” leaving it with no choice but to retaliate.
Of course, this trade-war is having major ramifications for business across the globe. When China retaliates it doesn’t do so lightly; it has dropped US coal imports completely as it looks for sources closer to home. The overall stock market has been jolted by actions such as these.
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