A couple of weeks ago, President Trump announced a 25 percent tariff on steel and a 10 percent tariff on aluminum imports which is roughly $50 billion worth of products. Now, the White House announced yesterday that this was not the start of a trade war as China responded with a $50 billion worth of tariffs on U.S. products. After everything is taken into calculation, the United States' tariff affects roughly 10 percent of Chinese exports to the United States while the Chinese tariff covers roughly 25 percent of American exports. If the tariffs were to stop here then it would be safe to argue that there is no trade war going on, but a couple of policy moves in an attempt to gain political support. However, after the White House announced yesterday there was not a trade war, President Trump asked for $100 billion worth of extra tariffs to be implemented on China. This could be the start of the end of the United States. A trade war typically does not result in growth, but instead halts it. In fact, most economies experience a recession when trade wars occur. It will be interesting to see how these polices take root as they come into play.
https://www.nytimes.com/2018/04/04/business/the-united-states-is-starting-a-trade-war-with-china-now-what.html
https://www.bloomberg.com/news/articles/2018-04-05/trump-orders-consideration-of-100-billion-in-new-china-tariffs
2 comments:
Looking at percentage exports of both countries it looks like USA is more dependent on China than the other way around. This may result in US consumers bearing the brunt of this trade war. However, the chinese economy already has a decline of private consumption growth and I wonder whether these tariffs will accelerate that decline.
Who is to blame for this trade game? and when will it end!!
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