Fears of a trade war between the United States and China have taken another step of coming to fruition after the U.S. imposed a 25 percent tariff on steel and a 10 percent tariff on aluminum goods on Chinese products.
China announced its plan to impose tariffs on up to $3 Billion of U.S. imports. According to Beijing’s commerce ministry, this includes a 15 percent tariff on dried fruit, wine and steel pipes and 25 percent tariff on pork products and recycled aluminium.
But the retaliation will not end there.
China has compiled a list that covers an estimate 128 products which may be included in its “tariff hit list” if it cannot arrive at an agreement with the United States on trade issues.
U.S. President Donald Trump recently signed a presidential memorandum which would impose a total of $60 Billion tariffs on Chinese goods. However, the memorandum would take effect only after a 30-day consultation period which starts once the list has been made official.
Trump said the measures were intended to punish China for pressuring American companies to surrender U.S. technology:
“We have a tremendous intellectual property theft situation going on.”
The Office of the US Trade Representative (USTR) has listed around 1,300 product lines from China that will be subject to tariffs. The product lines are worth an estimated $48 Billion.
Trump also blames China for the United States’ $375 Billion trade deficit which resulted in the loss of American jobs:
“It is the largest deficient of any country in the history of our world. It is out of control.”
Beijing’s retaliatory moves confirmed what many businesses were concerned about after Trump announced his plans to impose tariffs on Chinese products; a trade war between the two countries.
In early January, Trump slapped tariffs on imported washing machines and solar panels to protect U.S. businesses. China accounts for the largest share of imported washing machines and solar panels.
A statement from the Chinese commerce ministry read that China plans to implement the tariffs in two stages.
It would impose the 15 percent tariff on an estimated 120 U.S. products which would include steel pipes and wine which would amount to $977 million. The higher 25 percent tariff on $1.99 Billion worth of pork and aluminium would be implemented after.
“We intend to impose tariffs on certain U.S. imports to balance out the losses caused to Chinese interests by the U.S. tariffs on imported steel and aluminum.”
The Dow Jones industrial average plunged by 724 points after Trump signed the presidential memorandum imposing $60 Billion tariffs on Chinese imports. The Nasdaq Composite and Standard & Poor’s 500-index likewise dropped on fears of a trade war with China.