Talk of a potential global trade war has had the headlines buzzing very loudly in recent weeks, and now it seems to be looming over the horizon. As President Trump announced in early March his intention to impose tariffs on imported aluminum products to help strengthen our national security baseline, based on the idea that such imports are actually a threat to American national security. American lapdog Canada, of course, came out barking loud and clear that the idea sounds terrific and that Ottawa will also develop measures to counter the apparent malign influence of imported steel and aluminum goods.
Trump’s crackdown on Chinese imports came to fruition three weeks into the month when he introduced his tariff package on the 22nd worth around $60 billion. China has now taken the cue to launch a countermeasure in a list of products that will experience retaliatory tariffs, where pork and aluminum scrap are going to face a tariff of 25% in response to America’s new 25% tariffs on imported steel, and 15% on other goods like wine, apples, ethanol, and steel pipe in response to the US tariff imposed on imported aluminum. Beijing is also suspending tariff reduction obligations on nearly 130 products having an American origination together with even more tariffs based on existing tariff rates. France24 reports:
China on Monday imposed new tariffs on 128 US imports worth $3 billion, including fruits and pork, in retaliation for US duties on steel and aluminium, fuelling fears of a trade war.
Beijing’s move, which the Xinhua news agency said was decided by the custom tariffs commission of the State Council, follows weeks of heated rhetoric and threats between the world’s two biggest economies.
President Donald Trump has repeatedly railed against China’s massive trade surplus over the United States, promising during the US election campaign to slash the US deficit.
Beijing had warned last month that it was considering the tariffs of 15 percent and 25 percent on a range of products that also include wine, nuts and aluminium scrap. The tariffs came into force on Monday, Xinhua said, citing a finance ministry statement.
The levies are in response to tariffs of 10 percent on aluminium and 25 percent on steel that have also angered US allies.
Trump, however, has temporarily suspended the tariffs for the European Union as well as Argentina, Australia, Brazil, Canada, Mexico and South Korea.
The US leader has also unveiled plans to impose new tariffs on some $60 billion of Chinese imports over the “theft” of intellectual property.
China has called on the United States to stop its “economic intimidation” and warned it was ready to hit back.
Beijing ‘held its ground’
But Beijing has so far held fire against major agricultural products such as soybeans or major industries such as aerospace giant Boeing — items that state-run daily the Global Times suggests should be targeted.
The nationalistic newspaper said in an editorial last week that China has “nearly completed its list of retaliatory tariffs on US products and will release it soon.”
“The list will involve major Chinese imports from the US,” the newspaper wrote, without saying which items were on the document.
“This will deal a heavy blow to Washington that aggressively wields the stick of trade war and will make the US pay a price for its radical trade policy toward China,” the Global Times wrote.
Despite the rhetoric, US Commerce Secretary Wilbur Ross on Thursday suggested the new measures on intellectual property were a “prelude to a set of negotiations”.
The United States ran a $375.2 billion deficit with China last year.
But the Global Times, without revealing sources, said the United States had made “some unreasonable demands in an attempt to coerce China into a compromise.
“This was naive. With strong trading power, China held its ground.”
China’s actions really only impact around 1% of American imports, so it isn’t a crushing move as much as it is part of a bargaining chip to convince the Trump admin not to go down this path, as China is indeed ready and willing to act in defense of its own economic interests. But Beijing has been pleading with Washington not to bring these tariffs to bear as it really doesn’t benefit anyone. It’s essentially a form of economic bullying to try to force China to accept certain lopsided economic and foreign policies, really at China’s own expense. Such pleading, however, has fallen on deaf ears, as Trump’s package comes into effect.
The threat of this issue turning into a full blown trade war is part of what is starting to make investors quake in their boots, as China isn’t the only country that has faced a stern outlook from Washington, additionally echoed by its Western allies. Other countries that think that they can actually get by while giving America the finger if it turns to them with an economic proposal demanding their sacrificial compromise could follow suit, and it’s a very real possibility with countries that have been having a hard time with America’s policies, be they political, economic, or military in nature. China’s new Yuan backed oil futures market is one such area where alternatives to American backed policies are starting to shake things up.