The possibility of a trade war between the world’s two largest economies showed signs of igniting, as US President Donald Trump said he will push ahead with the implementation of a 25% tariff on $50 billion of goods from China that contain industrially significant technologies. In response, Beijing said it would impose tariffs “of the same scale and strength”.
Namely, Trump laid out a list of more than 800 strategically important imports from China that would be subject to a 25% tariff starting from 6 July, including cars, Reuters reported. In an official statement, the White House explains:
These tariffs are essential to preventing further unfair transfers of American technology and intellectual property to China, which will protect American jobs. In addition, they will serve as an initial step toward bringing balance to the trade relationship between the United States and China.
In addition, the US will pursue additional tariffs if China engages in retaliatory measures, such as imposing new tariffs on United States goods, services, or agricultural products; raising non-tariff barriers; or taking punitive actions against American exporters or American companies operating in China, the statement notes.
Responding, the Chinese news agency Xinhua said China would impose 25% tariffs on 659 US products, ranging from soybeans and autos to seafood.
A study commissioned by the US National Retail Federation and the Consumer Technology Association found that tariffs on $50 billion of Chinese imports, coupled with the impact of retaliation, would lead to four job losses for every job gained and reduce US gross domestic product by nearly $3 billion. The NRF President and CEO, Matthew Shay, commented:
Tariffs are taxes on American consumers, plain and simple. These tariffs won’t reduce or eliminate China’s abusive trade practices, but they will strain the budgets of working families by raising consumer prices…Unfortunately, these tariffs and the retaliation China has promised put all this economic progress at risk. Once again, we urge the administration to change course and develop a clear and comprehensive strategy to hold China accountable.
NRF testified before the Office of the U.S. Trade Representative during a hearing last month to share the retail industry’s concerns over tariffs.