China hits-back at US, imposes tariffs on imports worth $3bn
Days after proposing tariffs on American products, China has made it official for 128 items imported from the US, including pork and wine. The tariffs of up to 25%, which go live today, will affect imports worth $3bn. The move was aimed at "safeguard(ing) China's interests and balance" losses caused by the US' new steel and aluminium tariffs, Beijing said.
The beginning of a likely global trade war
Last month, US president Donald Trump announced steep 25% tariffs on imported steel and 10% on aluminum imports. The decision came as the struggling domestic market was facing a "national security threat," they said. This drew sharp criticism from the World Trade Organization and the International Monetary Fund. EU trade chiefs mulled slapping a 25% tax on select imports from the US.
China retaliates after Trump approves additional tariffs
But the trigger for China's actions came when Trump signed an executive memorandum to impose tariffs on Chinese imports worth up to $60bn. "This is the first of many" trade actions, he warned. Beijing first threatened, and has now issued a list of 128 items with up to 25% tariffs, including steel pipes, cars, ginseng, modified ethanol, airplanes, soybeans and cotton goods.
Will Beijing's move affect Washington?
Analysts agree that though China's move makes a statement, it won't dent trade considering the value of US imports to China is worth over $100bn; in 2018, it is expected to touch $172bn. For Chinese tariffs to have a significant effect, "the US shouldn't be the main producer of that specific product, so China can easily find substitutes for import," economists at Natixis said.
What's next for the US and China?
Trump has already announced plans of new tariffs on up to $60bn in Chinese imports. The US is punishing China for allegedly stealing American technology, Washington claims. Beijing's now "mild" reaction may intensify in retaliation. China has said it doesn't want a trade war, but wouldn't sit by if its economy was hurt. Trump, however, has claimed "trade wars are good."
What does it mean for the rest of the world?
Though the EU, Argentina, Australia, Brazil, Canada, Mexico and South Korea are exempt from Trump's tariffs as of now, two of the world's biggest economies indulging in a trade war will make it difficult for companies to operate; consumers will suffer due to higher costs.
