onald Trump has sharply escalated the trade war between the world’s two largest economies, announcing that the United States will implement 10 percent tariffs on $200 billion worth of Chinese imports.
In a statement issued yesterday, Trump announced that the new tariffs will take effect on September 24th, he also threatened that if China does not change its ways, then those tariffs will rise to 25 percent on January 1st, 2019. In addition, he warned that if China tries to retaliate in any way, then he will not hesitate to slap tariffs on an additional $267 billion of Chinese goods.
That final option would mean tariffs on essentially all Chinese imports to the US. Last year, the US imported $505 billion worth of goods from China and, earlier this summer, Trump imposed tariffs on $50 billion of Chinese imports, firing the first real opening salvo in the trade war.
China responded to that salvo with tariffs on $50 billion of American goods, a move which seriously hurt American farmers and infuriated Trump.
China is targeting our farmers, who they know I love & respect, as a way of getting me to continue allowing them to take advantage of the U.S. They are being vicious in what will be their failed attempt. We were being nice – until now! China made $517 Billion on us last year.
— Donald J. Trump (@realDonaldTrump) July 25, 2018
In his statement, Trump accuses China of engaging in “numerous unfair policies and practices relating to United States technology and intellectual property,” which “constitute a grave threat to the long-term health and prosperity of the United States economy.”
“China has had many opportunities to fully address our concerns,” Trump wrote. “Once again, I urge China’s leaders to take swift action to end their country’s unfair trade practices. Hopefully, this trade situation will be resolved, in the end, by myself and President Xi of China, for whom I have great respect and affection.”
However, Beijing and Xi Jinping have yet to show any sign of backing down to Trump’s tariffs threats. Back in June, while meeting in Beijing with a group of CEOs from mostly American and European multinational companies, Xi had some unusually ominous words: “In the West, you have the notion that if somebody hits you on the left cheek, you turn the other cheek. In our culture, we punch back.”
When the Trump administration first floated the idea of tariffs on $200 billion of Chinese imports, China’s commerce ministry responded by calling the proposal, “totally unacceptable” and “irrational,” vowing that China will once again take “necessary countermeasures” in order to defend its core interests.
However, China imported only $129.9 billion worth of goods from the US last year, meaning that in order to proportionally respond to Trump’s latest move, Beijing will likely have to look outside of tariffs.