Trade war officially begins, and China fires right back
Analysts see Trump’s tariffs as likely to hurt US consumers most
The Chinese government said Friday that it “immediately” retaliated against increased U.S. tariffs on Chinese imports as President Donald Trump’s administration effectively launched a trade war with its most important trading partner.
China’s foreign ministry in Beijing said tit-for-tat duties on U.S. goods took effect straight away after Washington’s 25 percent tariff on $34 billion worth of Chinese goods kicked in at 12:01 a.m. EDT Friday. The ministry gave few other details. Beijing had previously signaled that China would make a “necessary counterattack” if needed on a similar amount of U.S. exports including soybeans and cars. The U.S. levies mostly target China’s industrial goods and some electronic components. A long list of targeted products directly purchased by Americans such as TVs, printers and washing machines was sharply revised in June after a trade hearing.
Trump is not happy with the United States’ large trade deficit with China and insists Beijing has used unfair and predatory tactics such as requiring U.S. companies to hand over technology in exchange for access to China’s market. China rejects the allegation.
But many analysts and economists nevertheless believe the new tariffs are counterproductive and will chiefly harm one segment of society: consumers.
“The decision to impose tariffs on Chinese goods will harm American consumers and businesses without addressing discriminatory and systemic Chinese trade practices and policies,” said Josh Kallmer, executive vice president for policy at the Information Technology Industry Council, a trade association for the communications technology industry. “It is troubling that the (Trump administration) continues to assume that the imposition of tariffs will convince China to resolve complex trade issues and irresponsible to downplay the impact on American workers and businesses.”
Maarten-Jan Bakkum, a strategist at NN Investment Partners, a Netherlands-based asset manager, said in an email that “protectionist measures by one country could potentially spiral out of control, leading to more retaliation by more countries, eventually affecting a bigger share of Chinese (emerging market) and global exports.”
The United States had a record $375 billion trade deficit with China in 2017, according to Bloomberg data. Beijing is Washington’s largest single-country trading partner.
Beijng’s official state newspaper, China Daily, accused the Trump administration of “behaving like a gang of hoodlums” for increasing the tariffs and said the White House risked damaging the global economy if it did not reconsider its actions.