China Trumps USA: China responds to Trump with their own trade tariffs

June 10, 2019

2 min read

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What's going on here?

On the 1st of June, China imposed $60bn (£46bn) worth of tariffs on US goods.

What does this mean?

These news tariffs are imposed in retaliation to the US doubling tariffs on $200bn worth of Chinese goods. China has announced trade tariffs of up to 25% for US goods as well as some plans to blacklist some foreign firms! Trump warned the country against increasing barriers to trade, but Beijing decided to do this nonetheless. The levies impact products such as lamb, pork, coffee and alcohol.

This is the latest instalment in a tit-for-tat trade exchange between China and the US, seeing both governments raise tariffs despite negotiations In December. The trade war seen tariffs rise from affecting $16bn worth of US goods in August 2018 to $60bn worth of goods, under one year later.

What's the big picture effect?

The effect of these international titans going through economic war has worldwide consequences for both businesses and consumers. Businesses may be faced with increased costs of raw materials, which may well be passed onto the consumers!

Trump seems to believe that these tariffs will not have any devastating effects for US consumers as they can buy the same products elsewhere (most likely at an increased cost) and that the only negative effect will be on China as many of the businesses based there will up and move to Vietnam.

This thought process was shared by Karishma Vaswani (a business correspondent for the BBC) who stated that “at most, one tenth of the US’s gross domestic product could be shaved off”. However, she goes on to say that the Chinese government could go one step further by banning the export of raw materials to the US, which is a key element in many American industries. This harsher step could lead to the closure of businesses in the US, which will definitely affect the nation’s economic growth.

This trade war has been running alongside the US’s decision to ban Huawei from trading with the US due to fear of Chinese espionage. This long running saga between the two will not end until one backs down. All we can do is watch and wait.

Report written by Mohammad H​

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