China’s Sunday announcement that it is going to impose tariffs on United States imports is another sign of a possible escalating trade war. China’s commerce and finance ministries said that the tariffs on approximately $3 billion worth of US imports will affect 128 products. A tariff of 15% will be imposed on 120 American products including wine, fruit, nuts, ginseng, and steel commodities. A higher 25% tax will affect eight additional products, notably pork and recycled aluminum scraps. These tariffs imposed by the Chinese go into effect on Monday.
The announcement was a direct response to February’s decision by US President Donald Trump and his administration to impose tariffs on steel and aluminum products from China. Those tariffs are intended to punish the Chinese technology and aerospace industries and were stated to be a matter of national security. Trump and his administration have also gone on record to state that the imposed tariffs are a punishment against the Chinese for stealing American jobs through unfair trade practices.
China’s Ministry of Commerce stated that the US sanctions violate World Trade Organization (WTO) regulations on trade discrimination against fellow WTO members. Although the US has since lifted the sanctions on its allies including Canada, the European Union, and Mexico, the tariffs against China have remained in place. Chinese officials have repeatedly stated that they are not looking to participate in a trade war, however, they must continue to defend their interests and balance the economic losses caused by the US tariffs.
Financial experts note that the Chinese tariffs against the US will primarily affect agricultural goods hailing from states that largely supported Trump in his Presidential election. Officials also believe that these Chinese imposed tariffs are only the beginning. As the US continues to reveal additional tariffs aimed decreasing the large trade deficit in goods with China, it is expected that the Chinese will keep retaliating with additional measures of their own. How these measures will affect the world’s two largest economies is still unknown.