A possible trade war continues to brew as China proposes its own tariffs on American goods after President Donald Trump’s administration released a list of 1,300 Chinese exports it plans to target with tariffs.
Despite this action and concerns of a trade war, Trump insists we cannot lose said war because we’re already “$500 billion down.”
Trump tweeted this morning:
Trump’s administration unveiled 58 pages “of about $50 billion in Chinese electronics, aerospace and machinery products it plans to hit with steep tariffs.”
Those listed in the pages face a 25% tax, which the administration states is a penalty against China for its “discriminatory policies that the United States says put its companies at a disadvantage in the Chinese market.”
Tariffs are awful. Plain and simple. Guess who ends up paying for it? The consumers.
Trump has decided this course of action even though the U.S. Chamber of Commerce and National Association of Manufacturers opposed it. Both groups agree we must do something about China, but this is not the way to go:
“If history is any indication, these proposed tariffs will not work and will be entirely counterproductive. Tariffs penalize U.S. consumers by increasing prices on technology products and will not change China’s behavior,” said Dean Garfield, chief executive of the Information Technology Industry Council, which represents companies such as Apple, Dell, IBM and Google. “Instead, the administration should act consistent with international obligations and work with other countries to address systemic issues with China.”
It is important to remember these are just proposals and nothing has gone into effect. The affected companies have 30 days to comment on the tariffs. This will leave “an opening for the sort ofnegotiated [sic] settlement that business groups favor.”
Chief Economic advisor Larry Kudlow sought to ease fears by reminding viewers on Fox Business that nothing has actually happened yet and no one “should overreact right now” because this proposal “is a negotiation using all the tools.” From CNN:
Asked to explain the President’s tweet and if he agreed with the sentiment that you can’t lose a trade war, Kudlow replied: “I’m not sure what exactly he’s referring to.””You have proposals,” Kudlow said, referring the US tariffs proposed against China. “There’s no action here and you’re going to go through a process of comments and resubmitting comments and discussions.””You’re not likely to see any definitive actions for a couple of months,” he added.Kudlow acknowledged that the chances that the tariffs against China might never materialize is “not zero,” but he said it would be up to Trump to decide what, if any tariffs, are levied.
In response, China proposed tariffs on 106 U.S. products that include soybeans, cars, and a few airplanes, which add up to almost $50 billion. Commerce Secretary Wilbur Ross downplayed the tariffs on CNBC this morning:
China’s tariffs “amount to about three-tenths of a percent of our GDP. So, it’s hardly a life-threatening activity,” Ross said in a “Squawk Box” interview. “It’s relatively proportionate to the tariffs we put on based on the intellectual property.”
Ross agreed with Trump that America lost the trade war with China “many years ago.” He also echoed Kudlow’s sentiments, stating that he wouldn’t be surprised “at all if the net outcome of all this is some sort of negotiation.”
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