The U.S. President Donald Trump signed a memorandum on Thursday that would impose tariffs of up to $60 billion on Chinese Imports. These new measures have been taken to penalize China for theft of intellectual property of American companies. The new memorandum is expected to take a dig at few products in technology sector in which China has an advantage over the U.S. Peter Navarro, the Director of Trade said that the U.S. is “strategically defending itself against economic aggression.” He defended Trump outlining that the President took the steps to defend American corporations. As per previous reports, it was expected that the Trump administration would apply tariffs of up to $30 billion on Chinese imports. However, Trump himself increased the limit to $60 billion in tariffs on Chinese products.
Many significant industries have responded to increase in tariff which could lead to trade war between two countries. They outlined that this trade war is an unwinnable war. Rick Helfenbein, the president and CEO of the American Apparel & Footwear Association, told CNBC, “The tariff idea is a war that you just can’t win.” Some of the proposals made him little bit happy, but he added that this could lead to war.
However, Chinese authorities retaliated against increase in tariffs by targeting the U.S. agricultural products that rely heavily on the Chinese export market. China has released a list of 128 U.S. products that would be targeted to retaliate Trump’s memorandum. Pork, steel, fruit, wine, and other goods depending on Chinese exports will be targeted. Helfenbein suspected that textile is likely to be included in the list. He added, “We don’t like it, we’re very concerned as an industry that apparel and footwear and accessories might be on the list, and if they are on the list it really would not be good for our industry.”
The U.S. agricultural products, specifically soybeans will be another potential target for Chinese authorities. China imports nearly $14.2 billion worth of soybeans every year. The move to apply tariffs on soybeans will impact the U.S. manufacturers significantly. John Heisdorffer, president of the American Soybean Association, told CNBC Friday, “China’s our number one customer. One out of every three rows of soybeans that we grow here in the U.S. goes to China, so it’s a big impact.”
The likely winner of this trade war will be other countries, particularly countries from South America. These countries will be willing to take charge if the U.S. products become expensive in China. This would impact the U.S. farmers who contribute to majority of Trump’s voter base. Rural America helped Trump win over the White House in the 2016 Presidential elections. It will be interesting to see if they continue to support him in next elections. Similarly, other industry executives have expressed their concerns. If their industry is in the list of those 128 products, it will work against them.
Chinese commerce ministry said that recent U.S. trade actions have impacted the multilateral trading system and disrupted the international trading order. It also urged the Trump administration to resolve its issues and avoid damage to the bilateral relationship.