As the trade war between the United States and China intensifies, Beijing has announced retaliatory tariffs on a range of US products, prompting fears of a full-blown trade war with severe economic consequences.
Trade Tensions Escalate as Chinese Counter-Tariffs Kick In
The trade war between the United States and China has taken a turn for the worse, with Beijing announcing retaliatory tariffs on a range of US products. The move comes as President Donald Trump threatens to impose even more tariffs on Chinese goods.
The US-China trade war refers to the economic conflict between the United States and China, initiated in 2018.
The primary cause was China's alleged theft of intellectual property and technology, as well as unfair trade practices such as subsidies and tariffs.
The US imposed tariffs on $360 billion worth of Chinese goods, while China retaliated with tariffs on $110 billion of US exports.
The trade war has resulted in significant economic losses for both countries, with the US experiencing a 1.2% decline in GDP growth in 2019.
What are Tariffs?
Tariffs are taxes charged on goods imported from other countries. In this case, the US has imposed a 10% tariff on all goods from China, while China has responded with its own tariffs ranging from 10% to 15%. The tariffs will apply to crude oil, liquefied natural gas, farm machinery, and select other products.
Why is Trump Using Tariffs?
Trump argues that tariffs are necessary to boost US manufacturing, protect jobs, raise tax revenue, and grow the economy. He also claims that tariffs will help combat the scourge of fentanyl, a powerful drug that causes tens of thousands of overdose deaths in the US each year. The administration says chemicals used to make the drug come from China.
The Trump administration implemented several significant changes to US trade policies, including tariffs on imported goods from China and other countries.
The tariffs aimed to address trade imbalances and protect American industries.
According to the US Census Bureau, US exports rose 7.5% in 2020, while imports increased by 3.1%.
The Office of the United States Trade Representative reported a record $817 billion in total two-way goods trade for 2020.
Critics argue that tariffs have led to higher prices and reduced economic growth.
What’s at Stake?
The trade war between the US and China has significant implications for both countries. The US is one of China’s largest trading partners, while China is a major source of goods for the US. If the tariffs continue, it could lead to higher prices for consumers and potentially even more severe economic consequences.
How Will This Affect Other Countries?
Canada and Mexico have been caught in the middle of the trade war, with Trump threatening 25% tariffs on their goods. However, both countries have agreed to pause these measures while they work together to address the issue. The UK has also been affected, with Trump suggesting that a deal could be worked out.
Will Tariffs Cause Inflation?
Economists suggest that a portion of the cost of tariffs ends up being paid by consumers. Sellers may raise the price of goods they are importing, leading to higher prices for consumers. Some experts warn that these new tariffs could prompt a wider trade war and exacerbate inflation.
What’s Next?
The future of the trade war is uncertain, with both sides refusing to back down. The risk of a full-blown trade war between the US and China has increased significantly, with potential consequences for global markets and economies.
A trade war occurs when countries impose tariffs on each other's goods, leading to a decline in international trade.
The escalation of a trade war can have severe consequences for the global economy.
According to the World Trade Organization (WTO), a 1% increase in tariffs can lead to a 0.5% decrease in GDP.
In 2018, the US imposed tariffs on Chinese goods worth $50 billion, prompting China to retaliate with its own tariffs.
The WTO reports that trade tensions have increased by 40% since 2017.
