Trump tariff list targets key China goods, trade war risk rising

The Trump administration just released the list of Chinese products it will target with 25% tariffs.  The Trump tariff list focuses on 1,300 products including chemicals, industrial products, and high tech components.   These products are worth about $50 billion of annual imports from China.

Notably, the tariff list excludes retail items.  Accordingly, it shouldn’t drive up costs for consumers.

This comes on the heels of China slapping tariffs on $3 billion worth of imports from the US.  That was in response a previous round of US tariffs that targeted steel products.

Moreover, the Trump administration is clearly targeting Chinese imports in a manner that maximizes the pain for China but minimizes it for American consumers.

This move is likely to escalate trade tensions further with China.  Many of the industries targeted by the Trump tariff list are the same ones that the Chinese government is focused on expanding.  Specifically, the list includes a lot of tech items — like semiconductors, touchscreen displays, and lithium batteries.

Moreover, the Chinese government is already working on a response.  Cui Tiankai, China’s ambassador to the United States, has already gone on record to declare that China will respond to any tariffs imposed by the US.

Notably, Ambassador Cui Tiankai mentioned that China’s response will be of the same proportion, scale, and intensity.   That implies that China will respond with $50 billion worth of tariffs against US imports.

Trump is the wild card in China trade tensions

Last year, the US imported a hefty $506 billion worth of goods from China.  The US exported only about $130 billion worth of goods.  That adds up to a $376 billion trade deficit.

President Trump railed against what he termed “bad” trade deals with China during his election. He had also promised to fix America’s yawning trade deficit with the country.

More recently, he has followed this up with statements like:

“When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win,”

— President Trump, March 2018

The trade deficit with China is a signature issue for President Trump.  Accordingly, he is unlikely to back down.  Moreover, he has ample room to escalate tariffs further.  That means the US-China trade conflict is far from over and a full-blown trade war is a distinct possibility.

See more of our analysis here.

 

 

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Al Basoglu

I am a financial services professional with over a decade of experience in various roles. I've lived and worked abroad in 5 different countries while pursuing personal and professional challenges. My interests include markets, history and different cultures. I tend to weave all of my interest into my analysis and articles.