TRADE WAR BEGINS
Could last until ’19
Team Trump and China slapped tit-for-tat tariffs on $34 billion worth of US and Chinese imports on Friday, with Beijing accusing Washington of triggering the “largest-scale trade war” as the world’s two biggest economies escalated their battle.
Hours before Washington’s deadline for the tariffs to take effect, President Trump upped the ante on its largest trading partner, warning that the US may ultimately target more than $500 billion worth of Chinese goods — that’s roughly the total of US imports from China last year.
Previously, the White House had limited tariffs to an additional $200 billion of imports from China.
Officials in both Beijing and Washington were ready for an extended battle, possibly lasting into 2019, experts warned.
Beijing’s commerce ministry, in a statement shortly after the US deadline passed on Friday, said the world’s No. 2 economy was forced to retaliate by placing jacked-up 25 percent tariffs on US cars, soybeans and lobsters.
Some Republican lawmakers lashed out at Trump, saying his trade war will hurt farmers and others.
“Tariffs not only hurt our farmers, ranchers and airplane manufacturers, but they also harm every American consumer,” said GOP Sen. Jerry Moran, of Kansas, a state heavily dependent on agriculture.
But White House Council of Economic Advisers Chairman Kevin Hassett, in an interview on Fox Business on Friday, said Trump was “going to deliver better [trade] deals.”
“He’s called the bluff of other countries that have basically been abusing ... our workers for a long time,” Hassett said. Chinese experts disagreed. “We can probably say that the trade war has officially started,” Chen Feixiang, professor of applied economics at Shanghai Jiaotong University’s Antai College of Economics and Management, told Reuters.
“If this ends at $34 billion, it will have a marginal effect on both economies, but if it escalates to $500 billion like Trump said, then it’s going to have a big impact for both countries,” said Feixiang.
US relations with other major trading partners have also been fraught following the Trump administration’s decision earlier this year to slap tariffs on imported steel and aluminum, including those metals from the European Union, Mexico and Canada.
Trump also wants to renegotiate the 24-year-old North American Free Trade Agreement with Canada and Mexico — and has threatened to impose levies on cars imported from Europe.
The president has said trade wars could be good for the economy — and “easy to win.”
While Bank of America Merrill Lynch analysts said the chances of the trade war escalating were “modest,” it couldn’t rule out “a full-blown, recession-inducing ‘trade war.’ ”