Tit-for-tat escalates

 

China announced on Friday that it intends to implement up to 25 percent tariffs on $60 billion worth of U.S. goods if President Donald Trump ends up following through with his plan of taxing $200 billion worth of Chinese goods.

This move is the latest in a tit-for-tat standoff between the two countries. Both countries have increased tariffs for months now with no signs of slowing down. China defended its position, stating:

“In violation of the bilateral consensus reached after multiple rounds of negotiations, the United States has again unilaterally escalated trade frictions.”

U.S. products which could face tariffs include libations, nuts, meat, and furniture. Analysts report that this would affect $170 billion of goods exported to China. However, these tariffs affect China more than the U.S., as the U.S. imports 18 percent of its goods from China, whereas China imports only 8 percent of its groups from the U.S.

Consequently, it will be challenging for China to continue raising tariffs to retaliate against President Trump’s hikes. White House Press Secretary Sarah Sanders explained:

“Instead of retaliating, China should address the longstanding concerns about its unfair trading practices.”

At the same time, because China is U.S.’s largest trading partner by a wide margin, it cannot necessarily afford to continue raising its tariffs either. A trade war would not only dismantle the U.S.’ economy, but it would dismantle the world economy.

However, President Trump allegedly seeks to reduce the trade deficit with China, which is why he has continued to raise U.S. tariffs. The strategy may work out in the end, but so far it is proving to be more of a bane than a boon for the U.S. economy.

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