FAQ: US and China trade tariffs. Is a trade war next?

Ann Santiago
April 5, 2018

China targeted 106 USA goods for import tariffs - including important US agriculture exports like soybeans - after the Trump administration last night released a list of 1,300 categories of Chines goods the US plans to impose tariffs on. In 2017 alone, US footwear companies and USA consumers paid almost $3 billion in these hidden taxes. The U.S. plans to place tariffs on a similar amount of Chinese goods, including industrial robots and telecom gear, subject to potential tariffs to protest Beijing's alleged theft of U.S. technology.

The tariff list from the office of US Trade Representative Robert Lighthizer followed China's imposition of tariffs on $3 billion worth of USA fruits, nuts, pork and wine to protest new US steel and aluminium tariffs imposed last month by Trump.

It's a strategy that might just work.

China's retaliation came after trading hours so Japan's Nikkei added 0.2 per cent in thin volumes, Chinese blue chips eventually ending down.

China and the USA both imposed tariffs on each other’s goods as trade tensions escalate.

"I think China is perfectly happy to play a game of chicken with the United States on this because they believe the U.S. will blink first".

"There is no victor in a trade war, and an initiator will harm itself as well as others".

The total number of U.S products that will fall under the latest tariffs to be introduced by China sit at 106, though for the U.S government and the economy, the punitive tariffs on aircraft, soybeans, and autos are going to hurt the U.S economy and the administration the most.

"We're in a trade slap-fight right now", not a trade war, said Derek Scissors, resident scholar and China specialist at the conservative American Enterprise Institute. "US footwear tariffs stifle innovation and job creation and raise the cost of shoes for every American".

"China's response was tougher than what the market was expecting - investors didn't foresee the country levying additional tariffs on sensitive and important products such as soybeans and airplanes", Gao Qi, Singapore-based strategist at Scotiabank, told Bloomberg.

Beijing's "Made in China 2025" strategy is transparent and not discriminatory, and is in line with World Trade Organization rules, Wang also said.

China will levy 25 percent tariffs on imports of 106 US products, with USA farmers, plane- and automakers likely to bear the brunt. The trade is worth about $14 billion. -Chinese trade tensions and mounting public scrutiny of technology companies. China heavily subsidizes its own industries, including steel.

The U.S. market had taken heart overnight from bets that President Donald Trump's Twitter attacks on online retail giant Amazon would not translate into actual policy.

Global markets have been hit hard by the Chinese announcement, as have the products on the list and the companies making them.

Asian stock markets, which also traded on Monday, ended mixed, as fears of a trade war between the United States and China loomed large. According to Adam Slater, the lead economist at Oxford Economics, the spat between the U.S. and China is not yet a full-on trade war, but the danger is certainly present.

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