The Tensions Increase in the Trade War after China’s Latest Measures

Neither America nor China has any intentions of backing out off the import tax war; with both economies already facing the brunt of the attack. Scroll down to find out more.

China Won’t Back down in their Trade War with the US

There seems to be no end in sight of the trade war between China and the US administration. China decided on Monday to additionally raise the taxes on American goods worth $60 billion. In this way, they will prolong the already absurd conflict between the two superpowers. China’s move to add another 25% imposition on American products was seen as a provocation on the other side, especially after US officials have warned China to stop retaliating.

On the other hand, despite the latest development, president Trump claims to be rather happy with America’s position in this conflict. He said that even though China’s countermeasures are expected, they would not severely affect the US economy. He has also used the opportunity to tell China to back off and stop playing this tit-for-tat game because things can only get worse for them.

It is clear right now that everything revolves around the demonstration of power and that this frozen conflict may last for a long time if neither one of the two leaders shows some will to step down a notch.

At this point, it seems that two countries are far from making any kind of compromise because Trump’s administration has filed a motion for increasing taxes on imported Chinese goods for another 25%, in the wake of China’s countermeasures on Monday afternoon. Trump simply thought he has the “right to do so” while at the same time, he threatened China that American companies would leave the market because China has become too expensive for doing business.

Trump is said to have been considering to impose taxes on the final set of goods, that would comprise all products imported from China. However, all of these additional  US administrative measures won’t come to pass before the G-20 summit in Japan next month where the two leaders will meet.

Until then, the frozen conflict continues to rage on with officials from both sides going back and forth for a series of meetings that still haven’t provided a solution for this, dire dead-end, situation.

While both China and America stubbornly go for a “measure for measure” approach in this trade war, American companies and the American stock market suffer the most.

There are some in Trump’s administration that admit this neverending trade conflict will be harmful for both economies; most of the worlds economists share this view as well. The problem is, the only man who gets to make the decisions, doesn’t really get this. Trump believes that China will fill the American budget with these astronomical taxes. However, the truth is, American companies pay these duties on imported Chinese goods. Then these importers have to raise the price of products they sell; meaning, American consumers have to spend more money on products from China. This will eventually lead to lower demand for Chinese products.

It is clear now that US companies and citizens are getting the shorter end of the stick in this trade war, and the experts predict that this situation will cause the GDP to drop for another 0.4%. Trump responded to these serious warnings with his idea of an “easy fix,” suggesting American businesses to start buying from other countries that don’t have such a high tax rate and avoid paying increased tariffs on Chinese products that way. Easier said than done. Americans turn to the Chinese market for a whole plethora of reasons. First of all, there are products, or parts, that can only be found on this market. In addition, most of the products are more expensive elsewhere.

Trump also stated another thing, which he believes strengthens the American position in this deadlock situation with China. He said China could not impose the same amount of taxes on American goods because America’s export to this country is significantly lower than the import.

The state of things shows something entirely different, though. When China starts to apply its newly increased tariffs, almost 2500 American products will be subject to taxes in the 25% range, whereas another 1000 of them will be submitted to 20%.

China may also introduce other, more radical, measures besides taxes to fight back. A high-ranking official declared that China might stop buying their farming products, and energy, as well as restrict the service exchange it has with the United States.

Still, Trump faces these dire prospects with a positive attitude, posting a tweet about the  3.2% GDP, which he attributed to the implementation of his trade war measures.

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