Trade war: US and China launch “unprecedented” blows at each other

The Trump administration will impose new tariffs on $200 billion worth of Chinese goods starting at noon today (Beijing time), targeting thousands of items ranging from tires, baseball gloves, bicycles, backpacks, refrigerators, furniture to industrial machinery parts. The list runs to 194 pages.

China has said it will retaliate with 5-10% tariffs on $60 billion worth of US imports, including meat, chemicals, clothing and auto parts.

According to CNN, such "tit-for-tat" moves will certainly push trade tensions between the two sides to a new level.

Starting today, Mr. Trump’s new wave of tariffs on China will cover nearly half of the goods the Asian powerhouse sells to the United States. The latest round of tariffs affects thousands of products purchased by American consumers, including millions of dollars worth of imported furniture and electronics. The tariffs imposed previously hit mostly industrial goods.

The Trump administration has justified such actions as punishing China for unfair trade practices. Accusing the US of protectionism and bullying, China has retaliated by imposing tariffs on more than $110 billion worth of US goods.

And the war between the two sides shows no signs of stopping.

The new US tariffs are set to increase from 10% to 25% at the end of the year. China has not said how it will respond.

President Trump has also threatened to impose tariffs on another $267 billion worth of Chinese goods, which would mean the entirety of China’s annual exports to the U.S. (a total of about $506 billion in 2017) would be targeted.

Because China imports less American goods than the other way around, it will have no more American products to tax. But analysts say it still has many options for retaliation, including higher tariffs, import quotas, restrictions on people going to the U.S. for education and tourism, and tax cuts for affected companies.

Trump's tariff decision appears to have stalled plans for a new round of trade talks between the two sides, according to CNN. Treasury Secretary Steven Mnuchin has invited Chinese negotiators to Washington to resume talks, but a senior White House official confirmed no meetings are scheduled in the near future.

Many US business leaders agree that China’s trade practices need to be addressed, but they oppose tariffs. CEOs will now have to decide whether to absorb the costs themselves or pass them on to consumers. Some may be able to find new sources of supply outside of China, but that will take time.