The global economy is on the verge of a trade war after China announced it would retaliate against US President Donald Trump’s tariffs on $50 billion of imports from the country.
At the core of the conflict between the world’s two biggest economies are two detailed lists of goods on which tariffs will be imposed beginning on July 6. A list released on Friday targets China’s industrial advancement and the other is aimed at commodity producers in the American heartland.
Beijing’s response, which came early on Saturday, makes it likely that the US will impose more duties in line with a pledge made by Trump on Friday.
Weeks of shuttle diplomacy between Beijing and Washington aimed at reducing China’s huge goods trade surplus with America have yielded nothing
Weeks of shuttle diplomacy between Beijing and Washington aimed at reducing China’s huge goods trade surplus with the US have yielded nothing. In fact, the same products that China had pledged to purchase more of will instead be hit with higher import duties.
“There is very little chance that this three-week delay to July 6 will allow for a last-ditch effort to avert tariffs,” said Michael Hirson, Asia director at Eurasia Group in New York. “A first round of tariffs on $50 billion in goods is locked in and the risk of escalation to a second round is considerable.”
The US Trade Representative’s final list includes 1,102 product lines, primarily focused on Beijing’s Made in China 2025 plan to lead the world in high-technology industries such as automobiles, robotics, industrial machinery and aerospace.
Hours after Trump’s Friday announcement, Beijing released a list of 545 product categories covering about $34 billion in US exports that will be subject to an additional 25% tariff starting on July 6. The list includes a range of agricultural goods, including soybeans, wheat, corn, beef, pork and poultry, as well as automobiles. A second set of tariffs on other goods, including coal, crude oil, gasoline and medical equipment, will be rolled out at a later date.
The US imported Chinese goods worth $506 billion last year and exported about $130 billion, which means it has deficit of $376 billion, according to government figures.