The possibility of a trade war between the US and China seems all the more likely following the Trump administration’s announcement of fresh tariffs on US$50 billion (S$67.3 billion) in
Chinese goods. According to the US Trade Representative (USTR), the first wave of tariffs will take effect on July 6th, totalling in US$34 billion in goods that include robotics, aerospace, industrial machinery and automobiles. The second wave of tariffs on a further US$16 billion in Chinese imports are still in the works.
In line with the US President’s long-held campaign promise to punish China for their alleged unfair trading practices, the move comes in response to an investigation made by the USTR, which alleges the theft of US intellectual property by Chinese companies.
Tell me this is Déjà vu
Not quite. The imposing of tariffs comes after months of erratic trade relations between the world’s top two leading economies. Earlier this year, the US had imposed global tariffs on imported solar panels and washing machines in January, and then again on imported steel and aluminium in March. These were widely believed to be aimed at China, the world’s largest producer of steel and solar panels. Despite China having responded with tariffs of their own, tensions between the two seemed to have been cooling down in recent months.
In what appears to be an M. Night Shyamalan-esque plot twist, the ones who might eventually be impacted most by said tariffs would be the US itself. Goldman Sachs estimates US inflation to increase by 15 basis points.
China, the world’s Number 2 economy behind the US, has vowed to retaliate on US exports