Is U.S. Trade War With China A “Risk We Should Take?”

Washington D.C. – As the trade war between the U.S. and China continues to escalate, many are wondering if the hardball negotiating tactics President Trump is employing will be effective in helping U.S. negotiators win a “fair” trade deal with the overseers of the world’s second largest economy.

President Trump announced last week that his administration would be increasing existing 10% tariffs up to 25% on $200 billion worth of Chinese goods coming into the U.S.

The tariff increase became effective as of Friday, May 10, and is in response to trade talks between U.S. and Chinese negotiators coming to a halt last week.

 

The two countries had reportedly been making progress in their discussions on a new trade deal.

In fact, earlier this year, President Trump delayed scheduled tariff increases that were set to take effect on Chinese goods as of March 1.

However, as negotiations reportedly became more tenuous over intellectual property theft and forced technology transfers, President Trump moved to more than double the tariffs.

Tariffs of 25% were already being paid on $50 billion worth of “High Tech” Chinese products.

President Trump may not be finished imposing even more tariffs on Chinese goods.

He tweeted on May 5, that “325 billion dollars of additional goods sent to us by China remain untaxed, but will be shortly, at a rate of 25%.”

China Retaliates

The trade war escalated again on Monday as the Chinese Finance Ministry announced it would raise tariffs on $60 billion worth of U.S. imports beginning June 1, 2019.

Beijing will increase tariffs on more than 5,000 products to as high as 25%. Duties on some other goods will increase to 20%.

Those rates will rise from either 10% or 5% previously.

“Risk We Should Take”

The U.S. imports goods from China totaling $539.5 billion and the trade deficit stood at $419.2 billion in 2018, according to the Office of the U.S. Trade Representative.

If President Trump follows through on his latest threat it will mean that virtually all goods coming from China will have a 25% tariff imposed on them.

Economists worry the tariffs will serve to slow the U.S. economy at a time of outstanding GDP growth and almost historically-low unemployment.

 

On “Fox News Sunday with Chris Wallace,” White House Economic Advisor Larry Kudlow acknowledged “both sides will suffer” as a result of the increased tariffs.

However, Kudlow said he believes this negotiation tactic by the Trump Administration was worth it to get a fair trade deal with China.

“This is a risk we should and can take without damaging our economy in any appreciable way,” Kudlow said.

By any objective measure, the Chinese economy has been slowed as a result of the Trump tariffs.

In fact, Transportation Nation Network reported earlier this year that the Chinese economy posted its slowest annual growth rate in 2018 in more than nearly three decades at 6.6%.

Even Chinese statistics bureau chief Ning Jizhe acknowledged earlier this year that his country’s trade dispute with the U.S. has affected the domestic economy.

 

“Right Were We Want To Be With China”

In a new round of tweets on Sunday, May 12, President Trump asserted it was the Chinese who “broke the deal…& tried to renegotiate.”

Further, he moved to try to calm global markets and concerned Americans about the breakdown in talks.

“We are right were we want to be with China,” he said.

President Trump campaigned in 2016 on “not allowing China to take advantage of the U.S. anymore” with respect to trade, intellectual property theft, technology transfer, currency manipulation and a host of other issues.

 

For more than 30 years as a businessman, President Trump excoriated U.S. politicians for being “too soft” on China and not imposing tariffs as a means of negotiation.

So, it should surprise no one that he is doing exactly as he said he would.

The answer to the question of “is it worth the risk” will be provided soon enough as negotiators say they will sit down again in the near future to work toward a deal, though a date has not yet been set.

Interested in reading more of TNN’s coverage of the U.S./China “Trade War?” Click HERE.

 


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