(VOVWORLD) - Over the past three days, trade tension between China and the US drew international attention as the two sides threatened each other with higher tariffs.
With the US Trade Representative Office about to announce tariffs on a list of Chinese imports worth 60 billion USD, China announced 15% to 25% tariffs on 130 US products worth 3 billion USD. On Wednesday, China announced increased tariffs on additional US imports worth 50 billion USD including soybeans, cars, cigarettes, corn and cotton products.
It was a strong retaliation: 3 billion USD represents only 2% of the US’s export to China while 50 billion represents more than 33%.
On Tuesday, the US Trade Representative publicized a list of 1,300 Chinese imports to be hit with higher tariffs.
Everything began after President Donald Trump, citing a 375 billion USD trade imbalance with China, decided to slap higher tariffs on Chinese aluminum and steel. Later, the White House announced tariffs on other Chinese imports worth 60 billion USD and asked China to cut the trade imbalance by 100 billion USD.
Tit-for-tat
China’s tariffs hit major US exports like soybeans and cars which are also important to 1.5 billion Chinese people. The US earned 14 billion USD from soybean exports to China last year. China’s tariff decision will strongly affect American farmers, a majority of whom voted for Trump in 2016.
China is doing what it has said it would do if any tariffs imposed by the US with the same proportion, scale and intensity.
Dialogue or retaliation
After Mr. Trump sparked the trade tensions with China, it was predicted it would lead to a trade war with tit-for-tat tariff measures.
But no one wins a trade war. The US’s penalties will affect Americans first. Half of the 505 billion USD of Chinese imports last year was consumer goods. The US tariffs on Chinese computers, machinery, and industrial equipment will affect US companies increasing their prices and reducing their competitiveness on the global market. Hundreds of thousands of American workers are likely to lose their jobs.
Though China’s retaliation is aimed the US’s spearhead technologies, it will have side effects. Many American technological products are assembled in China, so higher tariffs will also affect Chinese workers.
Other countries are likely to be affected by this trade war. A new economic crisis is also possible.
Beijing has repeatedly called on the US to take constructive steps to stabilize and promote bilateral trade ties because there’s still time for the two sides to substitute dialogues for retaliation, but that time is short. Trump’s tariff decisions do not require Congressional approval.