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In a sign that the US-China trade war is worsening, on May 5th US President Donald Trump said that tariffs on $200 billion of Chinese goods would go up from 10% to 25% on May 10th.
….of additional goods sent to us by China remain untaxed, but will be shortly, at a rate of 25%. The Tariffs paid to the USA have had little impact on product cost, mostly borne by China. The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!
— Donald J. Trump (@realDonaldTrump) May 5, 2019
On May 8th, Trump spoke at a rally in Florida, claiming that trade talks with China had been moving “too slowly.” According to him, China was trying to buy time and wait a Democrat president who would cave in to Chinese demands.
The reason for the China pullback & attempted renegotiation of the Trade Deal is the sincere HOPE that they will be able to “negotiate” with Joe Biden or one of the very weak Democrats, and thereby continue to ripoff the United States (($500 Billion a year)) for years to come….
— Donald J. Trump (@realDonaldTrump) May 8, 2019
Beautiful evening in Panama City Beach, Florida. Thank you! #MAGAhttps://t.co/lNBM9sED2f
— Donald J. Trump (@realDonaldTrump) May 9, 2019
“By the way, you see the tariffs we’re doing? Because they broke the deal. They broke the deal,” Trump said. “So they’re flying in, the vice premier tomorrow is flying in — good man — but they broke the deal. They can’t do that, so they’ll be paying.”
Trump added that the United States “won’t back down until China stops cheating our workers and stealing our jobs.”
“That’s what’s going to happen. Otherwise, we don’t have to do business with them,” he said. “We can make the product right here if we have to — like we used to.”
He claimed that the decision to increase tariffs was “a win,” since Chinese Vice-Premier Liu He is to visit the US for a two-day visit with a delegation. Trump claims the Chinese side is now “willing to make a deal.”
On May 8th, the Chinese side expressed regret “over the planned measures by the United States to raise tariffs on imported Chinese products, saying escalating trade frictions is against the interests of the two peoples as well as people of the world.”
“China deeply regrets this, and will be forced to take necessary countermeasures if the U.S. side puts the tariff measures into effect,” a statement said.
The South China Morning Post cited Shanghai-based political analyst Chen Daoyin who claimed that China was willing to push through to the end, and that it had the will to not relent.
“President Xi and his administration have a very firm stand, showing no signs of backing off in the face of challenges,” Chen said. “Xi’s Chinese dream to make a stronger nation has also limited his team’s ability and flexibility to handle external issues.”
Chen said that the focus of the Politburo, the country’s top decision-making body, had changed in the last two months, with less attention on the nation’s economic situation.
“The latest Politburo meeting did not focus on economic stabilisation as it had done in February. Leaders may feel the impact of tariffs on China’s economy is not as grave as expected,” Chen said.
Currently, $50 billion worth of Chinese goods had a tariff placed on them at 25%, and $200 billion had a 10% one. From May 10th, according to Trump’s decision the $200 billion would be put under 25% tariffs.
He has also previously threatened to put tariffs on the remaining approximately $325 billion of Chinese goods that it exports to the US.
In response, China has placed tariffs on $110 billion of US goods. What a possible Chinese response to the May 10th increase would be remains unclear.
The US, in addition to a trade war with China, also had a few spats with other countries in the last year.
After renegotiating trade deals between Mexico and the US, the Mexican side imposed tariffs of up to 25% on US steel, pork, cheese, apples and potatoes.
Canada imposed tariffs on $12.6 billion of US goods after a renegotiated trade deal. The EU imposed 25% tariffs on $2.8 billion of US goods.
Turkey tripled its tariffs on US goods after the US doubled its tariffs on steel and aluminum imported from Turkey.
India also reportedly plans to raise import tax on nuts and it is the biggest buyer of US almonds.
Currently, the US is also attempting to push for a better trade deal with Japan and it is unclear how that will unravel.
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