China Boosting Tariffs on U.S. Goods
Ben MillerAP Economics
With tensions rising among some of the global superpowers in the last few months, China has not made anything better by now announcing they have boosted tariffs on U.S. goods. Some of these goods are apart of huge industries within the US, such as soybeans, aircraft and vehicles. Experts have estimated that the tariffs are worth a combined $50 billion, and are at this point praying that they won’t see a full-scale trade war. Tariffs are the tax paid on a particular import or export, and a $50 billion increase to these US goods is a significant and statement move by China.
This action did not come out of the blue, as it was provoked by recent economic moves performed by the Trump Administration. Recently the Trump Administration has published a list of nearly 1,300 Chineses products that they plan to impose with a 25% tariff. Of course, the Chinese Embassy was the first to condemn the action by saying: “Such unilateralism and protectionist action has gravely violated fundamental principles and values of the WTO (World Trade Organization). It serves neither China’s interest nor U.S. interest, even less the interest of the global economy,” they go on to state, “As the Chinese saying goes, it is only polite to reciprocate.” China got creative with it and even listed several agricultural products with the goal being to harm the economy of Iowa, whose ex-governor Terry Branstad, is the current U.S. Ambassador in China.
As seen in figure one, Trump responded on Twitter by saying: “We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the U.S. Now we have a Trade Deficit of $500 billion a year, with Intellectual Property theft of another $300 billion. We cannot let this continue!” This situation is interesting considering Trump has reached out to China as an ally to counter North Korea, but from an economic point of view, these two powerhouses are nothing short of enemies at the moment.I understand the justification behind the decision to increase tariffs on China as unfair trade practices in the past (with the current tariffs), has caused the economy to see an increase in unemployment by 6 million people and also has caused 60,000 factories to close, according to the Time.com. A decrease in factories within the US would cause a decrease in capital stock, thus leading to a decrease in investment spending which would lead to an overall decrease in GDP. With a decrease in the GDP, to me, it justifies the Trump Administration’s decision to increase the tariffs on China. On the other hand, though, I believe that the situation must have been handled in the wrong way considering China came back and raised the tariffs on the US even more. Especially in this current time period, I believe that government actions, especially relating to the economy, must be done with great attention to detail and to a certain level of precaution. If the US simply sprung this increase in the tariffs on China with no warning or explanation, that would justify the response that China had. Trump also claimed according to Time.com that the trade deficit of $375.2 billion between both the US and China is costing the US a significant amount of American jobs. This again justifies and proves to me that increasing the tariffs on China was initially a good idea with the proper intentions in mind, but was simplied carried out in the wrong fashion.
Works Cited
Chandran, Nyshka, and Everett Rosenfeld. “China Announces It's Imposing New Tariffs on 128 US Products.” CNBC, CNBC, 2 Apr. 2018, www.cnbc.com/2018/04/01/china-announces-new-tariffs-on-us-meat-and-fruit-amid-trade-war-fears.html.“China Hits Back at Trump by Targeting U.S. Goods Worth $3 Billion.” NBCNews.com, NBCUniversal News Group, www.nbcnews.com/news/us-news/china-imposes-additional-tariffs-response-u-s-duties-steel-aluminum-n861916.
“Twitter.” Twitter, Twitter, twitter.com/.
“China Increasing Tariffs - Search Results.” Time, Time, time.com/search/?q=china+increasing+tariffs.
It's very interesting that from an economic standpoint you say that the United States and China are enemies. I look around and tons and tons of the things in my room right now are made from China. However, the situation seen right now isn't a trade war, it's more of a tariff war.
ReplyDeleteI agree with Hunter. This is very interesting to see and there has been a lot of trade with China in the past. It is crazy the amounts of imports the united states has from china and this shows that the value of the Chinese dollar is much less than the value of the US dollar.
DeleteIt's interesting how China and the US are enemies from an economic standpoint. You can go just about anywhere and find tons of items that are made in China. When seeing how much the US imports from China, it seems like we would be friends instead of enemies. However, the situation we're currently in seems like an issue on the tariffs and not on trade.
ReplyDeleteI find it interesting how this is a back-and-forth-type issue between the United States and China. It seems like an increase in tariffs from the US and then the same exact thing from China, which constantly has the taxes on goods increasing within and from both countries. On a side note, that number that you used describing that massive increase in unemployment seems rather ridiculous, considering it was due to the taxes. I agree with your last sentence of your post because it was - initially - a good idea but was handled incorrectly, due to some potentially immature responses and commentary.
ReplyDeleteThe argument between China and the United States probably won’t result in a trade war. I see it as a good thing though. Both countries are putting tariffs on eachother, but in the process are making eachother less reliant on one another. So much of U.S imports are from China. If the U.S starts producing those goods for themselves, that will boost the economy.
ReplyDeleteI appreciate the perspective you give in which you voice your agreement with a goal, but acknowledge the errors in the implementation of that strategy. Too many people succumb to group polarity and fail to see flaws in their strategies and strengths in opposing strategies.
ReplyDeleteWhile tariffs certainly do protect domestic industries, it’s important to realize that protectionism has its downfalls, especially when it’s taken to the extent of China and the US. When tariffs are imposed, meaning that it costs more for citizens to buy foreign goods, domestic industries are able to raise the price of their products to match the price of imported goods. This price level increase hurts consumers. It will be interesting to see how this escalating trade war affects price levels in both the US and China.
ReplyDeleteIt seems like China is raising tariffs out of spite. Obviously, China doesn't like that their exports are being taxed, making them less affordable. They're fighting back by just doing the same thing to American goods. Having an economic standoff like this is unreasonable, and it could get out of hand.
ReplyDeleteThis is very interesting to see and there has been a lot of trade with China in the past. It is crazy the amounts of imports the United States has from China and this shows that the value of the Chinese dollar is much less than the value of the US dollar. If this continues I think it could really have a negative affect on both countries.
ReplyDeleteThis is very interesting considering Trump just rose tariffs on steel and aluminum from foreign countries. It is only common sense to think that China's decision must've influenced Trump's.
ReplyDelete