The US is preparing to announce by early December tariffs on all remaining Chinese imports if talks next month between presidents Donald Trump and Mr Xi Jinping fail to ease the trade war. The United States and China are two of the largest economies in the world. Both countries consider the other as a partner..
The US is preparing to announce by early December tariffs on all remaining Chinese imports if talks next month between presidents Donald Trump and Mr Xi Jinping fail to ease the trade war.
Background
The United States and China are two of the largest economies in the world. Both countries consider the other as a partner in trade and an adversary in geopolitics. Diplomatic relations between the US and China was first established in 1844 with the Treaty of Wanghia. This agreement allowed the US to trade in Chinese ports. After the Qing Dynasty was overthrown, in 1911, the US recognized the legitimacy of the Republic of China (ROC) government.
US President Donald Trump has previously been a critic of China. He blamed the country for loss of jobs within the US and has often criticized the US trade deficit with China. China’s trade surplus with the United States widened in 2017 while total foreign trade volume maintained rapid growth.
Earlier this year, the White House announced a 25% tariff on 1100 Chinese goods. China was not happy about this, and Beijing retaliated with the same value: 25% tariffs on US products worth $34 billion per year. Each side has threatened further tariffs on the other and tensions continue to escalate, sparking fears of an all-out ongoing global trade war
China on 11th July vowed to take “countermeasures” after the United States announced 10% tariffs on an extra US$200 billion worth of Chinese imports. The proposed US duties on $200 billion worth of Chinese imports took effect on August 30.
Analysis
The US is preparing to announce by early December tariffs on all remaining Chinese imports if talks next month between presidents Donald Trump and Mr Xi Jinping fail to ease the trade war, three people familiar with the matter said. An early-December announcement of a new product list would mean the effective date – after a 60-day public comment period – may coincide with China’s Lunar New Year holiday in early February.
The list would apply to the imports from the Asian nation that aren’t already covered by previous rounds of tariffs – which may be US$257 billion using last year’s import figures, according to two of the people.
US officials are preparing for such a scenario in case a planned Trump-Xi meeting yields no progress on the sidelines of a Group of 20 summit in Buenos Aires in November, according to two of the people, who declined to be identified to discuss internal deliberations. They cautioned that final decisions had not been made.
The move indicates the Trump administration remains willing to escalate its trade war with China even as companies complain about the rising costs of tariffs and financial markets continue to be nervous about the global economic fallout. Stocks erased gains partly on concern about an escalating trade war between the world’s two largest economies.
The US this year has already imposed tariffs on US$250 billion in trade with China. Ten per cent tariffs on US$200 billion in imports that took effect in September are due to increase to 25 per cent on Jan 1.
Mr Trump has also threatened to impose tariffs on the remaining goods imports from China, which last year was worth US$505 billion. The White House is also considering excluding trade from the meeting agenda, but it is unlikely to cancel it altogether, according to two people familiar with the matter. “We are in the middle of a pretty nasty dispute. We’re in a trade dispute – I want to use that word because it’s a nice, soft word – but we’re going to win,” Mr Trump said on Saturday at an event in Indiana.
Assessment
Our assessment is that the ongoing trade war has clearly become a major cause of concern, especially among manufacturers. We believe that both firms and consumers have become increasingly worried about the impact of tariff war on demand, prices and supply chains. We feel that if the talks do not break the deadlock, the ensuing tariffs will be a point of no return for both of the countries.
Read more:
1) Trade war: impact on global economy
2) China’s trade war
3) US-China trade wars?
4) Trade War Intensifies
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