As the U.S. decided to impose extra tariffs on goods imported from China to punish the country for theft of intellectual property of American companies, the trade war between two countries began. The U.S. President Donald Trump signed a memorandum to impose tariffs of value $60 billion. Though some experts believed that Trump took this decision to defend American firms, some expressed concerns over potential trade dispute. 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 experts believed the tariffs on Chinese imports will be increased up to $30 billion, but they raised their eyebrows and dropped jaws after learning that it has increased up to $60 billion.
The trade war between the U.S. and China has straightened up as both countries released the list products that will be subjected to more tariffs. Though the products are roughly equal in value, this competition lays a foundation for devising different strategies. As Trump increased the tariff, the Chinese Commerce Ministry outlined that these actions have affected the bilateral relationship and interrupted international trading order. It urged Trump to resolve these issues, but it also stepped into the war as it sensed lack of action from the Trump administration.
The Trump administration planned to impose increased tariffs on nearly 1,000 Chinese products to punish Chinese government for unfair trade practices. The list was worked hard upon to lessen the pain felt by American consumers and Chinese businesses. The list of products by Trump involved products that can be easily replaced. On the other hand, China’s list consisted of products and industries that are politically sensitive. These products include planes, beef, and soybeans. The list consisted of more than 100 products, but they were worth nearly the list of products by the U.S. The lists outline different intentions and different risks. But when these lists are considered together, it clearly indicates the direction in which the dispute is moving forward.
The U.S. President Trump is putting pressure on the Chinese government to open its markets. On the other hand, he is trying to minimize disruptions for American citizens. As the tariff will not apply for next 60 days, he is trying to reach a quick settlement. However, the list of Xi Jinping would cause a financial pain to the U.S. As China is targeting soybeans to increase tariff, Trump will be under pressure to negotiate and lower the tariffs as he might lose votes from soybean states. There is a risk for China too. Many other countries have been complaining about the similar issues that Trump has been. It will show that China would fight to avoid opening itself up. In addition, if China continues to impose more tariffs on soybeans, for which the U.S. and Brazil are major suppliers, Brazil would raise the prices as it is acquainted about the trade dispute between China and the U.S.
More broadly, the aggressive tariffs imposed by China indicated that it is not interested in negotiations for open trade and investment environment. China showed that how serious they are when the other country challenges its centralized economic model. China seems in good position to go for war. However, if they negotiate, it will be good for the bilateral relationship.