Bluster aside, U.S., China vulnerable to pain
Tariffs, trade war to deliver blows to certain industries
WASHINGTON — The U.S. and Chinese governments have been flashing a lot of bravado just before firing the first shots in a conflict that risks erupting into a mutually damaging trade war.
“China will not bow in the face of threats and blackmail, nor will it be shaken in its resolve to defend global free trade,” a spokesman for Beijing’s Commerce Ministry declared Thursday, one day before the two sides were to subject billions of dollars of each other’s goods to punishing tariffs.
President Donald Trump, who ran for the White House on a vow to force China and other nations to reform their policies, has insisted that a trade war would be easy to win.
Yet among the people and business in both countries that are suddenly under threat from higher costs, closed-off markets and deep uncertainties, there’s far less confidence. A trade war between the world’s two biggest economies will leave casualties — A trade war between the world’s two biggest economies will leave casualties including farmers in the Midwest. from makers of musical instruments to farmers in America’s Midwest to a manufacturer of soldering irons south of Shanghai.
In some areas and industries, pain is already being felt. “There’s going to be an awful lot of battles lost on the way,” said Tim Velde, a fourth-generation farmer in western Minnesota’s Yellow Medicine County who is bracing for China’s tariffs on American soybeans. “I don’t see anybody winning.”
Tong Feibing, general manager of China’s Ningbo Top East Technology Co., which makes soldering irons and had been exporting 30 percent of its output to the United States — before sales plunged in advance of tariffs — is worried.
“There is a chance the company will lose money and might bankrupt,” Tong warned. “I will do whatever I can, including layoffs.”
At 12:01 a.m. Eastern time Friday, the United States was set to slap tariffs on $34 billion in Chinese products. And Beijing was ready to respond in kind. From there, the hostilities could escalate quickly and drastically. Trump has threatened to slap tariffs on up to $450 billion in Chinese imports — nearly 90 percent of all goods China sent the U.S. last year — if Beijing continues to retaliate and doesn’t yield to Trump’s demands.
The Trump administration wants China to drop what it calls its predatory drive to supplant American technological dominance, through tactics that include forcing U.S. companies to reveal trade secrets in return for access to the Chinese market and committing cyber-theft.
Trade wars can draw blood in several ways. Exporters face taxes on what they ship across the Pacific. This makes their products more expensive and less competitive.
And importers must pay more for the foreign machinery and components they buy — and then decide whether they can afford to pass along those higher costs to their customers.
In choosing the Chinese goods to tax, the Trump administration tried to limit the impact on U.S. consumers. It aimed instead mainly at industrial products.
Yet those tariffs will hurt American companies that rely on Chinese-made components and machinery.
Most Americans wouldn’t recognize the vast majority of the Chinese imports that the Trump administration is targeting. But they would recognize the companies that use them.
PetSmart says the administration’s tariffs will inflate the cost of imported water filters for home aquariums. Jacuzzi has said its hot tubs and bathtubs will be affected by higher U.S. tariffs on pumps. Newell Brands, which owns Rubbermaid, says Americans may face higher costs for its imported FoodSaver vacuum sealer products.
Moog Music Inc. in Asheville, N.C., known for synthesizers used by the likes of David Bowie and Michael Jackson, warns that the tariffs on imported Chinese circuit boards and other parts will “immediately and drastically” increase the cost of its instruments and might require layoffs.