By levying a 10% tax on Chinese imports on Tuesday, President Donald Trump started a major action in the continuous US-China trade war. China declared retaliatory tariffs—15% on U.S. coal and liquefied natural gas, and 10% on crude oil, farm equipment, large-displacing vehicles, and pickup trucks—in retaliation immediately, announcing an antitrust investigation of Google. China’s commerce ministry has placed export restrictions on rare minerals including molybdenum, tungsten, tellurium, and ruthenium
What Actions Did China Take Against American Businesses?
Subjecting U.S. corporations PVH Group and Illumina Inc. to possible restrictions or penalties, China’s commerce ministry included them on its unreliable entity list. While Illumina specializes in genome sequencing and has lately teamed with Nvidia on health-related artificial intelligence technology, PVH owns labels including Tommy Hilfiger and Calvin Klein.
The U.S.' response to China's retaliation?
The U.S. government denounced China’s retaliatory actions, claiming that American unilateral tariff imposition goes against World Trade Organization policies. The U.S. finance ministry underlined that these kinds of initiatives have little effect in addressing current issues and compromise regular trade and economic cooperation between the two countries. Economists, who warn of possible effects on world markets, have grown worried about the US-China trade war.
What consequences follow for trade with Mexico and Canada?
Unlike the growing hostilities in the US-China trade spat, President Trump postponed levying 25% tariffs on Mexico and Canada. After talks with Mexican President Claudia Sheinbaum, Trump decided to delay the tariffs until Mexico promised to send 10,000 soldiers to its border. Talks with Canadian Prime Minister Justin Trudeau resulted in a suspension in duties as well because Canada promised a $1.3 billion border security strategy, hired a fentanyl tsar, and increased border monitoring.
How Are Global Markets Reacting?
The developments in the US-China trade dispute responded differently in the financial markets. The Hang Seng index gained over 2.8% in Hong Kong, while the Kospi index of South Korea climbed by 1.3%. The FTSE 100 in London slumped by 31 points in meantime. While the Canadian dollar dropped again following a fleeting recovery, the US dollar rose versus other major currencies.
Economists warn that the US-China trade conflict may cause American consumers’ prices to rise, so negating Trump’s prior pledges to drastically cut expenses. Trump argued that tariffs were a “very powerful” instrument to boost the U.S. economy even if he recognized possible economic consequences.
As both countries consider their next actions in the US-China trade conflict, all eyes are on the approaching call between Trump and Chinese President Xi Jinping as tensions rise.
