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Trading punches

New tariffs raise economic tensions between the world’s two largest economies

Trading punches

A customer shops for apples in a Beijing supermarket. (Mark Schiefelbein/AP)

On Tuesday, the Trump administration released a long list of Chinese imports that could soon face new tariffs including semiconductors, car and aircraft parts, and machine tools, a total of $12.5 billion in new tariffs on about $50 billion in goods annually. The threat of a trade war between the world’s two largest economies is roiling the stock market, upsetting the U.S. business community, and finding critics among conservatives.

China’s ambassador to the United States noted that Beijing would respond to the latest move with “countermeasures of the same proportion” and by Wednesday, it did just that: the Chinese Ministry of Commerce announced plans to place tariffs on U.S. goods such as aircraft, soybeans, and automobiles, also worth $50 billion annually.

Beijing has already imposed tariffs on more than 100 U.S. products including pork, fruit, recycled aluminum, and steel pipes. This was a direct response to the Trump administration’s tariffs on steel and aluminum announced last month. 

Some economists believe the tit-for-tat escalation could bring the two sides to the negotiation table to prevent a trade conflict, as the U.S. tariffs would not go into effect until June. On Tuesday, President Donald Trump said: “We’ll be working with China, we’ll be negotiating with China.” 

Geng Shuang, spokesman for the Chinese Foreign Ministry, also said he hopes to “resolve the differences in trade with the United States through dialogue and consultation,” but that it “should be done with mutual respect and fairness ... not with one side being condescending and coercive.”

The Trump administration decided to impose tariffs after finding China has a long history of stealing U.S. intellectual property through cyber-espionage and forcing technology transfers. Under Section 301 of the Trade Act of 1974, the findings allow the president to impose tariffs to remedy the situation.

In March, representatives from the business community—including agriculture, tech, and retail associations—sent a letter to Trump arguing that sweeping tariffs would “trigger a chain reaction of negative consequences for the U.S. economy, provoking retaliation; stifling U.S. agriculture, goods, and services exports; and raising costs for businesses and consumers.” 

They argued that tariffs on consumer products would increase prices for consumers and businesses without addressing China’s unfair business practices. Community service providers such as healthcare, education, and emergency responders, “rely heavily on consumer electronics and other imported goods,” and would be hurt by the increased prices. 

Instead of tariffs, the Trump administration could work with other countries that have been burned by China’s discriminatory business practices, the letter suggested. 

Heritage Foundation’s Riley Walters agrees. “The Administration will have to balance its policies for ‘America First’—or else risk the nation becoming ‘America Alone,’” he wrote in a report. “Taking unilateral action not compliant with WTO obligations risks undermining potential support from other concerned parties, and giving the upper hand to the Chinese.”

 

Bicycle graveyards: Bike-share took off in Chinese cities last year, but the market’s growth quickly exceeded the demand, leading to piles upon piles of broken and abandoned bikes. Check out this Atlantic photo essay of excess bikes, which undermines the purpose of “environmentally friendly” bike-shares.