China escalates the trade war, ordering tariffs on U. S. goods The move marks a proportional — yet still dramatic — retaliation against the White House’s Tuesday announcement that it would slap a 25% tariff on more than 1,300 Chinese products worth an estimated $50 billion.
Who will blink first?
China on Wednesday matched dollar for dollar the Trump administration’s plan to slap tariffs on $50 billion of imported Chinese goods, issuing its own list of U. S. products of comparable value that would be subject to hefty duties should the White House follow through with its tough trade sanctions.
Beijing’s swift and broad retaliatory response at first seemed to confirm fears that the world’s two largest economies were hurtling toward a trade war that would be costly for consumers and companies, and damage the global economy.
Anxious U. S. businesses pleaded for cooler heads, and investors panicked. But after sinking sharply when markets opened Wednesday, U. S. stocks not only recovered, but the Dow ended the day up 231 points.
The rebound followed assurances by White House officials that despite President Trump’s sharp rhetoric and threats, chances are good that the tit-for-tat trade salvos will end in settlement rather than much further escalation.
Though Trump tweeted Wednesday that the United States “can’t lose” a trade war with China because “that war was lost many years ago,” two White House officials, Commerce Secretary Wilbur Ross and chief economic advisor Larry Kudlow, tamped down fears and said it was still possible that the threatened tariffs would never take effect if talks yield a compromise. Kudlow called it the “early stages of a process” of negotiations that will end with “a pot of gold.”
But there is no quick or cosmetic solution to the deep-seated grievances at the heart of dispute. Trump wants fundamental changes from Beijing — to reduce its fat trade surplus with the U. S., to open up Chinese markets and to alter policies and behavior that officials say have hurt American intellectual property and innovation.
The trade conflict now has two active fronts. On March 8, the Trump administration announced global steel and aluminum tariffs to protect U. S. producers, exempting many nations but not China. Beijing shot back by levying 15%-to-25% tariffs on $3 billion worth of American goods, including scrap aluminum, frozen pork, dried fruits, nuts and wine.
The second battle, involving U. S. claims of Chinese theft of trade secrets and forced technology transfer, began on March 22 with Trump’s order to trade officials to draw up a list of Chinese products to hit with 25% tariffs. Those import taxes on some 1,300 items, announced Tuesday evening, target a wide array of Chinese technology, transport and medical products, including flat-screen TVs, air-combat simulators, bookbinding machines, centrifuges, malaria test kits, X-ray machine parts and flamethrowers.
Only hours later, China responded by announcing plans to impose a 25% tariff on 106 U. S. products, also with a total value of about $50 billion. While the U. S. tariff tally is long and meant to maximize the hit to China’s technology production and minimize the pain to American consumers — footwear and many other made-in-China household items were excluded — China’s list is compact and aimed at hitting America’s political gut, particularly Trump country.
Besides items like aircraft, cotton, beef and orange juice, Beijing targeted American soybeans, whose producers count on China for more than half of their total foreign sales.
