China vs. US Trade War Has Begun, Chinese Tariffs Go Into Effect

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China vs. US Trade War Has Begun, Chinese Tariffs Go Into Effect
homw / Pixabay

Following President Donald Trump’s China tariffs announcement, Beijing had floated the idea of hitting the US with tariffs on 128 products included dried fruit and pork. Monday, Beijing announced they would be making good on this threat and implementing the tariffs on $3 billion worth of imported US goods. The China tariffs have led many to speculate that a trade war between the worlds two largest economies has begun.

President Trump imposed the 15% aluminum and 25% steel tariffs citing a rarely used trade provision which allows the president to impose tariffs on the grounds of national security. China, along with a number of other trading partners, claim the tariffs are a violation of international trade laws. Several key US allies, including Mexico, Canada, South Korea, and the European Union have been exempted from the steel and aluminum tariffs.

China has indicated that their tariffs were issued in retribution to President Trump’s steel and aluminum tariffs which targeted a number of countries, including China. Tariffs are often seen as retaliatory measures and the China tariffs are no exception, indicating growing tensions between the two countries. The China tariffs were originally proposed 10 days ago, leading to speculation over whether Beijing would actually implement them.

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The US isn’t the only trading power taking issue with China’s economic policies. Japan and Europe have also clashed with the communist country over its state-led model which violates free trade agreements and limits access to the market.

China Tariffs from Beijing

As on Monday, Beijing is implementing a 15% tariff on 120 American goods including fruits, nuts, and steel pipes. Another eight products will be sanctioned at 25% including recycled aluminum and pork. Sunday, Beijing also announced they will be adding a 15% tariff on US imported ethanol, increasing the duty to 45%.

The ethanol tariff eliminates the cost difference between buying Chinese ethanol and the cheaper American ethanol. In an effort to reduce the infamous smog that covers many Chinese cities, the Chinese government plans to mandate that all gasoline be blended with ethanol by 2020. This plan calls for 16.5 million tons of ethanol, which requires nearly 50 million tons of corn to produce. Currently, China only produces around 2.7 tons of ethanol annually. Experts believe the Chinese market will be unable to meet the demand for domestically produced ethanol. Brazil is the largest producer of ethanol in the world, but their prices are still much to high for China. Economists believe this will force China to once again turn to US production of ethanol.

Experts point out that the $3 billion fingered by China for tariffs is just a small percentage of the hundreds of billions of dollars in goods that flow annually between the US and China. Tariffs are unlikely to hinder this trade relationship anytime soon, but they could have serious consequences for certain industries. US pork producers worry that the 25% tariff on pork could have a significant impact on rural America. Chinese voices have called for a tariff on US imported soybeans. China currently stands as the largest market for US soybeans. A tariff on soybeans could have further consequences for rural America, an import fraction of President Trump’s base.

Some of the largest US pork producers are actually Chinese owned companies. It is not yet clear whether Chinese owned organizations will be exempt from the tariffs.

Trump’s China Tariffs

In addition to the controversial steel and aluminum tariffs, President Trump has also announced duties specifically targeting China.

Friday, March 23, President Trump announced tariffs on $50 billion of Chinese goods in response to Chinese theft of American intellectual property and Beijing’s alleged pressuring of foreign companies to hand over technology. President Trump indicated these tariffs were only the beginning stages of his actions against China. The Trump administration has not indicated which goods specifically can be expected to be hit with tariffs, but Chinese machinery, aerospace, and technology industries can expect to see tariffs. Washington has said they will also take steps to limit Chinese investment into US tech.

The Trump administration has opened up a 30 day comment period for businesses before implementing the tariffs. The official announcement is expected to come April 6th.

While on the campaign trail, then Candidate Trump often targeted the trade deficit with China, Beijing’s currency manipulation, and Chinese intellectual property theft as causes behind rising unemployment and shuttered factories in the US. The trade deficit with China stands at $375 billion as of 2017. A recent study conducted by the United States Trade Representative found the annual cost of Chinese intellectual property theft on the US economy amounts to up to $600 billion a year. These numbers confirm an earlier 2017 study led by Commission on the Theft of American Intellectual Property.

While campaigning, Trump promised to be tough on trade with China, leading many experts to warn that this could lead to a trade war and an increase in the cost of consumer goods. Trump supporters loved his tough rhetoric in the election cycle, but many experts wonder whether they will be willing to see a potential increase in the cost of living due to a trade war with Beijing following the first round of China tariffs.

Despite criticism and even panic from political pundits, as well as the fresh China tariffs, President Trump hasn’t backed down on his stance on trade with China, promising further measures coming down the line.

A Coming Trade War?

For the past few weeks analysts and economists around the world have been contemplating whether a trade war between the US and China is rapidly evolving. Monday’s implementation of China tariffs seems to indicate that a trade war is brewing. Despite the tough rhetoric, Chinese officials have indicated their willingness to negotiate, but are also “prepared for the worst.”

Treasury Secretary Steven Mnuchin has said that US and Chinese officials are communicating behind the scenes to avoid escalation.

Asian markets in Shanghai and Tokyo closed low on Monday following the China tariff announcement on Monday.

Updated on

While pursuing her B.A. in Religious Studies and M.A. in Nationalism Studies, Isabella developed a passion for the narratives that motivate individuals to act. Post academia, she applies this interest to creating compelling stories through her writing. A Flordia born citizen, Isabella is currently based in Budapest and covers politics for ValueWalk - Email: isabellagbeham@gmail.com
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30 COMMENTS

  1. But what is the choice. You are thinking now, now, now. Prices go up and we live poorer, by choice, and hope someone in government is smart enough to get industry back. The choice is to let unfair trade continue, with the Chinese blocking imports while selectively destroying American industries and stealing our technology. They now want to import cars-stolen technology and design.

  2. What difference does it make. The world has caught up economically and we need to right the scales before China destroys our economy totally. I’ve read what their leaders say. They are aggressive and cocky, bent on regional domination and the end of Taiwan as a separate power, something Japan, a good friend, won’t welcome.

  3. Sure they are. The US has been robbing the world for 3 centuries now. But your blind to it. Republicans did everything they could to make sure anything Obama did would fail. Even now trump controlled EPA is helping big oil get more than green energy has.

  4. The United States is a failed economy and tariffs would help right it. Cheap and cheaply made has resulted in disposable everything. It is easier to repair appliances because they are expense than it is to buy cheap with no job.

  5. China is a modern robber baron that uses every trick available to keep out American products. Example, we subsidized solar panel startups and got several manufactures going. The Chinese response was to dump their panels on our market below their manufacturing cost and bankrupt the American companies. Obama didn’t let it happen although Solydea (sic), badly managed, did die.

  6. History says tariffs were good for the little guy. The Underwood tariff reductions in 1913 lowered tariffs but imposed an income tax. Before that the federal government was financed with tariffs. Once upon a time American wages were double free trade Great Britain. Wages that were more than enough to cover the cost of tariffs.

  7. From 1816 until the Kennedy Round of Tariff Reductions in 1967 the USA was the most tariff economy in the world. Blue collar wages in this economy peaked in 1972 and remain below that peak to this day. From 1861 until 1913 tariffs averaged about 45 percent. During that time we eclipsed free trade Great Britain as the most important industrial economy in the world. With free trade we decline.

  8. You are ill informed about tariffs. From 1816 until 1967 the USA was the most trade protected economy in the world. From 1930 to 1932 as tariffs went up the economy went down. At all other times the opposit happened. That is one percent of the time tariffs failed to improve the economy and 99 percent of the time tariffs helped the economy. Tariffs changed this country from an agricultural economy to an industrial economy. Without tariffs we would be Canada without a rich neighbor. The tariff of 1816 first imposed protective tariffs on what became the steel industry. At the time England supplied metal cheaper. The industry never would have developed without tariffs. By 1890 we were exporting steel having become the most efficient producer in the world.

    Prosperity in this country was the result of tariffs. The decline of our prosperity is a result of free trade. A hundred years of free trade in England so harmed the people that they voted for socialism in the 1940s. In China, after a hundred years of free trade imposed on them by the British after the Opium War they went communist.

    Free trade has brough it to where we are today. It is definitely not working for me.

  9. It will drop below what it costs to raise them causing farmers to cut the number they grow. Less numbers grown means less employees. We may see pork go way down till they catch up to the surplus created. Employees will not be needed if less are grown. People will lose jobs and farmers will lose money big time.

  10. Price of pork will rise in China, it’s not their basic need. We will have a huge surplus with no where to sell it. The price of pork in the states will drop way below the cost to raise it, causing growers to drop the number they grow and sell. Less hogs to market means less employees to help grow and butcher them. Other words it kills jobs here.

  11. I take it you have no idea what a tariff is, just like you probably have no idea what a sanction is. Tariffs are the added cost YOU will pay. NOT Chinese. Sanctions prohibit YOU from doing things not other countries.

  12. The bill was conceived as part of a solution to the purely domestic matter of avoiding a projected federal deficit reported by Secretary of the Treasury Alexander J. Dallas.

  13. Your delusional. The Hawley smoot tariffs were created because farmers did not step up to the plate to grow enough food. It caused wide spread hunger in the states. Prices of farm commodities dropped so low that the only way to get more money out of farm products was to strangle outside competition and prices of basic farm products sky rocketed to a point most of the nation could not afford them.

    Now farmers have high prices and plenty of outside of the country sales, once China sets a tariff on those products. The prices statewide will drop below the cost of production and hundreds of farmers will close up. Thousands of jobs will be lost.

  14. Actually pork prices will go down dramatically here in the states if pork producers can’t dump it in China. And after the glut, they will cut the number of hogs they actually grow, the end run is less hogs sold means less employees to manage and cut them up. I wouldn’t be surprised if a few closed shop and thousands l9sing jobs.

  15. You missed something in that long speel. The bill was conceived as part of a solution to the purely domestic matter of avoiding a projected federal deficit reported by Secretary of the Treasury Alexander J. Dallas. It was all about the US not taxing it’s own people properly, and creating a tariff that the people would pay not called a tax to which they would have said no.

  16. The left wing liberal news media will always take sides with anyone but the US. They are brainwashing this Nation with their socialist anti American agenda. Trump is rocking it and hitting it out the park.

  17. Absolutely correct. The US has been getting slaughtered worldwide for decades in nearly everything we do. It is so refreshing to finally have a President with the nads and the know how to stand up for this Country.

  18. If you are referring to Smoot Hawley, as those panicking pundits are fond of doing in ignorance, you like they have no clue that those tariffs were of an offensive nature. They were levied across the board upon the rest of the world, which in total had a trade deficit with the US. The US trade balance with the rest of the world then was well into surplus. Smoot Hawley as conceived was of offensive kick-em-when-they’re-down coup-de-grace motive. China has basically been doing exactly this for a long time now, offensive tariffs, offensive protectionism.

  19. Hmmm, if history is right, the Dallas tariffs of 1816 was instrumental in propelling the US to be the global economic power of the 20th century. Reagan also slapped tariffs on foreign-made motorbikes, resulting in Harley Davidson becoming am international icon again.

    Apparently, some people believe that tariffs are inherently always bad… but only if it’s the US which uses them.

    In reality, tariffs in and by themselves are neither good or bad. They’re just tools. Use a tool foolishly and you could hurt yourself. Use tariffs wisely, and the US could remain the dominant economic force on the planet for another century.

  20. Trade war has begun?

    Um, sorry to have to be the one to break it to you, but the PRC have been waging a trade war with the US and the West, ever since China’s Most Favored Trading nation status was de-linked from its human rights record and was allowed into the WTO.

    Beijing has been slapping tariffs on US-made goods for decades, on top of stealing Western designs of items being manufactured in China, unfairly subsidising Chinese industries owned by Communist Party cronies in order to dump their products around the world, rigging their currency and stock markets, etc.

    It’s about time the US did something about it. If China wants to escalate what it has started, let them. Looks like they need to be reminded whose economy is more dependent on exporting to the other.

    Apparently, tariffs are always evil but only if the US uses them. In reality, tariffs in and by themselves are neither good or bad. They’re just tools. Use a tool foolishly and you could hurt yourself. Use tariffs wisely, just as the US did with the Dallas tariffs of 1816, and the US could remain the dominant economic force for another century.

  21. Are you an expert in trade war history?
    I wasn’t even born during the last trade war,but I know this much – it didn’t ended well!

  22. Whether you believes tRump is doing the right thing or not, at the end of the day the little guys will be the ones who’ll hurt the most!

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