After a month-long truce, the talks resumed between two of the world’s biggest economies, hoping to end the year-long trade war. But what followed the ‘constructive’ Shanghai talks was a bit of a shocker for global trade with US President Donald Trump making another blow of additional tariffs on China.
On Thursday, Trump announced on Twitter of levying 10% tariff on all the remaining Chinese goods, which were by far exempted from any additional duty. It includes goods worth $300 billion such as smartphones, clothes, toys and other consumer products. Now we can safely say that US has imposed tariffs on essentially all of its Chinese imports. The additional tariff would be executed by September 1.
Trump wrote, “Trade talks are continuing, and during the talks the U.S. will start, on September 1st, putting a small additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China into our Country. This does not include the 250 Billion Dollars already Tariffed at 25%…”
The trade war between the two roughly amounted to $360 billion worth of each other’s goods, so far. Now the amount would reach up to nearly $700 billion. Unfortunately, it is hampering not only these two economies but also global investment and trade markets.
The news brought a heavy slump in the stock and oil market, besides straining the American consumer market.
China is all set to retaliate in a similar tone. On Friday, Foreign Ministry spokeswoman Hua Chunying said at a regular briefing in Beijing, “If the U.S. is going to implement the additional tariffs, China will have to take necessary countermeasures,” Chunying did not give the details on what the measures would be implemented.
The trade talks between the world’s biggest economies started to take a downturn earlier this last month when the Trump administration accused China of having “reneged” on its previous commitments of making structural changes, while Chinese officials argued that Americans raised their demand.
US has accused China of unfair trade practices including barriers against foreign companies to access its market and providing subsidies to favour Chinese companies. Trump administration said that such a biased approach has resulted in the loss of hundreds of thousands of US jobs over the past two decades. To put pressure on Beijing, Washington levied tariffs on Chinese imports. Beijing responded by putting duties on virtually every product it buys from the US.
Many economists believe that trade conflict between the two, is just the face of their rivalry, whereas the underneath issue is the geopolitical competition in different sectors. After battling over the technology sector, not the two have issues over the agricultural sector. US’s key motive behind tariff strategy is to push China to make structural changes to its economy, making way for more US farm produce, improving its intellectual property rights and preventing fentanyl trafficking. Will Trump’s hardball attitude gets the desired results is the key questions. The global financial markets are waiting and hoping for better news to break in as the two sides are expected to come for another round of talks in September.