China is pushing back against the United States and intensifying the already tense trade war. The Communist country has announced the US will now be subjected to tariffs on plane, cars, and soybeans as a response to the US’s tariffs on Chinese goods.
The Chinese Ministry of Commerce said on Wednesday that it plans to impose a 25% tariff on $50 billion worth of US exports. The 106 affected products will also include soybeans and chemicals. China’s announcement is a direct response to the Trump administration’s publication Tuesday of a list of about 1,300 Chinese exports, worth about $50 billion annually, that it intends to target with 25% tariffs.
The trade war is getting more intense as the two nations battle it out. The real loser in any trade war is the American consumer as the cost of goods soars affecting those already on a bowstring tight budget. The quick-fire exchange of threats is intensifying fears of a full-blown trade war between the world’s two largest economies. Markets dipped sharply as news of China’s plans emerged.
“The true purpose is not to escalate it to a trade war, but to demonstrate no weakness,” said Aidan Yao, an economist at fund management firm Axa Investment Managers. The Chinese may be escalating the trade war as a way to get the US to come to the table to discuss the economic and market issues facing both countries. Chinese Vice Finance Minister Zhu Guangyao said at a news conference in Beijing that the period before the tariffs go into effect is the “time to negotiate and cooperate.”
It’s still not clear when the new waves of tariffs announced by the US and China might actually take effect, or if they’ll be watered down in the meantime. China said the timing would be announced separately. The US government said it will hold a public hearing for US businesses about its plans next month.
Tommy Xie, an economist at Singapore-based bank OCBC, said it was unlikely that the latest tariffs from either side would come into force for another couple of months. But if talks during that period fail, then “the trade war starts,” he warned.