Donald Trump today directed his administration to consider additional tariffs worth $ 100 billion on China sending the equities tumbling raising on concern that the US, China two global economic powerhouses are entering in a full blown trade war.
The move threatens to unravel the peace making process pushed by the trade officials from both countries. Secretary Ludlow had yesterday hinted that the United States will be looking to bring the other side on table and negotiate on the trade tariffs. However, the situation has changed quite a lot since Mr. Trump’s announcement.
“In light of China’s unfair retaliation, I have instructed the USTR to consider whether $100 billion of additional tariffs would be appropriate under section 301 and, if so, to identify the products upon which to impose such tariffs,” read a White House statement.
A White House official later said the $100 billion figure Trump used in the statement referred to the value of the imports that would be covered by the additional tariffs, not the total amount of tax that would be charged on the products.
Xinhua, China’s state news agency, said Friday that Beijing was committed to defending its interests “against new U.S. actions.” A request for comment on the Trump statement from China’s Ministry of Commerce wasn’t immediately answered. Government offices are closed on Friday for the annual tomb-sweeping holiday.
Investors, Traders and economists fear that this is turning into a full-fledged trade war.
Timeline of Us, China Trade rift:
August 2017: US launches official investigations into trade with China
January 2018: US announces a 30% tariff on imported solar panels — most of which come from China — and taxes on large residential washing machines starting at 20%
February 2018: US Department of Commerce proposes tariffs
March 2018: Trump imposes tariffs on steel imports
April 2018: Beijing imposes tariffs on US imports worth around $3 billion, including a 15% duty on 120 American products including fruits, nuts, wine and steel pipes and a 25% tax on eight others, like recycled aluminum and pork.
Global markets have been hit hard from the war between the two giants. Even domestic tensions have been rising as well amongst some key Trump states. Farmers in Ohio, Missouri and other Midwestern US States have been feeling the heat from the Chinese ban on US imports. These are the key states for Donald Trump as majority of his loyal political followers hail from these agricultural states.
Furthermore, South Korean President asked both parties to sit and negotiate before the situation becomes unmanageable. South Korea is one of the important trade partner with China, exporting raw materials for auto industry among others.
