Daily Management Review

Trump Escalates Trade War, Announces New China Tariffs


Trump Escalates Trade War, Announces New China Tariffs
Amidst an environment of restarting of trade negotiations between the United States and China, US president Donald Trump has announced imposition of another tariff – this time a 10 per cent tariff on Chinese goods worth $300 billion. The new tariffs are slated to be imposed from September 1.
The long drawn and acrimonious trade war between the two largest economies of the world have rattled global financial markets and slowed global trade.
The latest announcement of fresh tariffs by Trump now virtually covers all of the products that are imported into the US from China and analysts feel that it would severely impact the resumption of trade talks between representatives of the two countries. Trump threatened to increase tariff rates further if no move to strike a trade deal was quickly made by the Chinese President Xi Jinping.
“I think President Xi ... wants to make a deal, but frankly, he’s not going fast enough,” Trump said.
The new trade tariffs were announced by Trump in  a series of tweets, apparently his favourite mode of making important government announcement, after he was briefed by US trade negotiators about virtually no progress being made on the most recent trade talks between the two countries held in Shanghai, China.
The tariffs could be increased further beyond the 25 per cent that has already been levied on $250 billion of imports from China if there was no progress towards a trade deal, Trump later said.  
The new tariffs were “not a correct way” to deal with the bilateral dispute, said senior Chinese diplomat Wang Yi while talking to reporters on the sidelines of an Association of Southeast Nations event in Thailand. “Additional tariffs is definitely not a constructive way to resolve economic and trade frictions,” he said.
Markets all across the world was hit hard by the announcement from Trump of new tariffs. There was 7 per cent fall in the process of crude oil which is the highest daily percentage drop since February 2016. An increase in consumer prices is now being predicted by retail associations predicted a spike in consumer prices.
“I’m not concerned about that at all,” Trump told reporters when asked about the impact on financial markets.
At a time when growth is already slowing in the United States, China and the euro zone, the global economy would be further hit by the new tariffs, said Moody’s.
Experts said that there can be a another rate cut by the US Federal Reserve because of the new tariffs in their effort to ensure growth of the US economy and shield it from the trade-policy risks.
China’s Global Times newspaper said that the prospects of a trade deal would lowered instead of being expedited because of the increased tariffs. Hu Xijin, editor-in-chief of the Communist Party-backed newspaper, said on Twitter said that the focus of China would now be more on combating the prolonged trade war instead of arriving at a trade deal with the US. “New tariffs will by no means bring closer a deal that the U.S. wants; it will only make it further away,” Hu said.