02 Aug 2019
Trump escalates trade war with China
Donald Trump, president of the United States (US) has stated that he will be imposing a new 10% tariff on Chinese goods, amounting to $300 billion (£247 billion), after an escalation of the trade war between the two countries.
The new tariff is to take effect on 1 September, taxing all Chinese imports to the US. It was imposed after there was little sign of breakthrough in the latest round of bilateral talks.
A variety of goods, including clothing and smartphone will all be affected by the fresh duty.
Criticising the move made by the US, Wang Yi, China’s Foreign Minister, said:
“Adding tariffs is definitely not a constructive way to resolve economic and trade frictions, it’s not the correct way.”
Trump announced these new plans over Twitter, while addressing this week’s negotiations in Shanghai, where China did not honour their promise of buying more US agricultural products.
The US president also attacked Chinese president, Xi Jinping, for not doing more stem sales of the synthetic opioid fentanyl, and for failing to strike a trade deal quicker.
“I think President Xi … wants to make a deal, but frankly, he’s not going fast enough.”
In comments made later by him, Trump communicated that the 10% tariff was a short-term measure, threatening that these could be increased down the line to more than 25%.
The news from president Trump hit the US markets hard, as did the Asian stocks, with the Yen increasing as investors rushed for cover.
When Trump was asked for his thoughts on the affect his announcement had on the financial market, he told reporters that “I’m not concerned about that at all.”
Experts have said that the tariffs could force the Federal Reserve to cut interest rates in attempts to protect the US economy from trade policy risks.
China could possibly retaliate by including tariffs, banning the export of rare earths and implementing penalties against US companies in China.
Economist at ING, Iris Pang, remarked:
“We believe China’s strategy in this trade war escalation will be to slow down the pace of negotiation and tit-for-tat retaliation. This could lengthen the process of retaliation until the upcoming U.S. presidential election.”