The US-China trade war is set to worsen as Beijing vows retaliation against President Trump’s threat to impose additional 50% tariffs on Chinese imports, escalating tensions and sparking fears of a global economic downturn.
The trade war between the US and China is set to worsen as Beijing has vowed to retaliate against President Trump’s latest threat to impose additional 50% tariffs on Chinese imports. The move comes after Trump announced his intention to impose new tariffs on Chinese goods in response to a 34% retaliatory tariff imposed by China last week.
The US-China trade war refers to a series of tariffs and counter-tariffs imposed by both countries on goods traded between them.
The conflict began in 2018, with the Trump administration imposing tariffs on Chinese imports worth $50 billion.
China responded with its own set of tariffs, escalating the dispute.
Key statistics include: In 2020, US-China trade fell by 16% due to the tariffs.
The US imposed tariffs on over $360 billion worth of Chinese goods.
China retaliated with tariffs on over $110 billion worth of US exports.
The US-China Tariff War: A Growing Concern
The US imported $438.9 billion worth of goods from China in 2023, with the value increasing by 2.8 percent from the previous year. The escalating tensions between the two economies have led to a decline in global equity markets, with recession fears growing as investors become increasingly anxious about the impact of the trade war on economic growth.
China’s Response: A Strongly Worded Statement
In response to Trump’s threat, China’s commerce ministry issued a strongly worded statement, condemning the US move as ‘adding a mistake on top of a mistake‘ and exposing the ‘extortionate nature‘ of the US. The statement warned that if the US escalates its tariff measures, China will take countermeasures to safeguard its rights and interests.
China has been increasingly vocal in its response to global issues, from climate change and economic inequality to human rights and international relations.
The country has established itself as a key player in the United Nations, participating in various forums and initiatives to address global challenges.
According to a 2020 report by the Pew Research Center, 64% of Chinese adults believe their country plays a more important role in world affairs than it did five years ago.
China's response is often characterized by its emphasis on economic development and state-led governance.
Global Market Reaction: A Breather After Heavy Losses
Despite the tensions, Asian stocks took a breather on Tuesday, gaining ground in early trading after heavy losses on Monday. Key indexes in China, Japan, Hong Kong, and South Korea were up, offering a glimmer of hope for investors who had been battered by the decline in global markets.
The tariff escalation: A combined 104% tariff
If Trump follows through with his threat, Chinese goods coming into the US will be subject to a combined 104% tariff. This is on top of the 20% tariffs imposed by the US in the first weeks of Trump’s presidency and the additional 34% tariff announced last week. The escalation of the trade war has significant implications for both economies, with global markets continuing to watch the situation closely.
Tariff escalation occurs when countries impose increasingly higher tariffs on imported goods, often in response to retaliatory measures from other nations.
This can lead to a cycle of escalating trade tensions and reduced international trade.
According to the World Trade Organization (WTO), tariff escalation can result in significant economic losses for both imposing and affected countries.
In 2019, the United States imposed tariffs on $360 billion worth of Chinese goods, leading to retaliatory measures from China.
The WTO reports that global trade has decreased by 0.5% due to escalating tariffs since 2018.
