Update on Trade War Between US and China
President Donald Trump has stated that he plans to go ahead with increasing tariffs on about $200 billion worth of Chinese goods and that duties will be slapped on all remaining imports from China if negotiations with Xi Jinping (China’s leader) don’t result in a trade deal that benefits the United States.
President Trump sat down with the Wall Street Journal on Monday (November 26th) and said that he is more than prepared to add tariffs on $267 billion in Chinese shipments if a deal cannot be reached between Jinping and Trump at a meeting in Argentina starting November 30th.
The intended tariff amount is set to be somewhere between 10-25% according to Trump.
One major industry that may be impacted by this trade war is Apple’s iPhones and laptops that are imported from China on a frequent basis. According to news put out about Trump’s views on this trade war, he has stated that Americans can “very easily” handle a 10% duty increase.
The reason behind this trade war is that the Trump administration believes that US companies aren’t getting treated fairly by China and they may be right in so many ways because China has always seemed to pay less for goods than the market should be able to bear.
“The only deal would be China has to open up their country to competition from the United States,” the president said, according to the Wall Street Journal. “As far as other countries are concerned, that’s up to them.”
This trade war started in September, when Trump set a 10% tariff on $200 billion of goods from China but the plan is to raise that 10% to 25% come January 1, 2019 if things haven’t changed by then.
What do the Chinese think of the trade war?
"This is largely a negotiation tactic," according to Tao Dong, vice chairman for the Greater China at Credit Suisse Private Banking in Hong Kong. "Putting high stakes pressure onto the other side seems to be a consistent pattern from the Trump administration."
China’s government officials have publicly stated that they would encourage the Trump Administration to be flexible and work with China to reach an amicable solution. The two presidents had a phone call on November 1 where they agreed to come to a “mutually acceptable proposal” while in Argentina later this month.
So far, Beijing has retaliated dollar for dollar on US imports based on the tariffs that the United States has set. China has set duties on $60 billion of US goods so far. Government officials in China have stated to the media that their goal for the upcoming meeting is to convince Trump to not increase the tariff rate to 25% in January.
How can the US fix their bottom line? Trump advises to American companies that are caught up in this trade war to move their factories back to American soil and produce here instead.
Trade wars are difficult but how can this one be solved so that both parties benefit? I would love to hear your thoughts!
Thanks for reading,