Trump fires opening shot in trade war against China
6 July 2018
The Trump administration has gone ahead with its threat to impose tariffs on China under section 301 of the 1974 US Trade Act, imposing levies on $34 billion worth of Chinese goods from midnight, with a further $16 billion to be targeted in the near future.
The action is the first shot in a direct trade war against China, with President Donald Trump telling reporters yesterday that more is to come.
Pointing to the inevitability of escalation, Robert Holleyman, former deputy US trade representative in the Obama administration, said: “Once these tariffs start going into effect, it’s pretty clear the conflict is real. If we don’t find an exit ramp, this will accelerate like a snowball going down a hill.”
China said it would respond immediately with “equal scale, equal intensity,” with major targets including soybeans and sport utility vehicles (SUVs).
According to lists published by both sides, the US tariffs will cover 818 categories of goods from China, while the Chinese measures will hit 545 categories of products from the US.
One of the key issues now is how the US responds to the Chinese counter-measures. In the war of words leading up to today’s actions, Trump threatened to impose additional tariffs on up to $400 billion worth of Chinese goods if Beijing retaliated against the US.
The interconnections between the two largest economies mean that the escalating trade war will involve companies around the world.
Warning of the consequences, Bruce Blakeman, a senior executive at the US agricultural giant Cargill, said: “The impact of trade conflict will lead to serious consequences for economic growth and job creation and hurt those who are most vulnerable across the…