President Trump’s trade war with China is heating up. The country’s Finance Ministry has announced it will issue import tariffs on 545 product categories. The $34 billion targeted by China is in retaliation to nearly $50 billion Trump targeted for product’s entering the United States on an annual basis.
The 25% tariff issued by the Chinese government includes everything from agricultural products, soybeans, corn, and wheat to beef, pork, poultry, and automobiles.
As expected, the tariffs target farmers in America’s heartland who rely on commodities prices to increase or at least remain stable as they prepare to sell their agricultural goods to vendors who then export much of America’s farm production overseas.
China has also promised to levy tariffs on another round of products that will include coal, crude oil, gasoline and medical equipment. A date for those tariffs has not yet been made publicly available.
Last year the United States imported $506 billion in goods from China while sending $130 billion overseas, leaving the United States with a $376 billion deficit.
Experts have largely agreed that Trump’s tariffs will do little to slow China’s advancing industrial complex. It has also been suggested that Trump’s advances against China will do little to slow the country’s quick growth in advanced products.
“The mentality of the Trump team is a little strange,” Andrew Polk, co-founder of research firm Trivium China in Beijing, told Bloomberg. “They’re saying, ‘We’re going to tax exports from China where they want to be a global superpower.'”
Polk suggests the best way to slow China’s advancement is to stop selling them semiconductors.
Trump has made it clear he believes the United States is being “treated very unfairly” by other nations in terms of trade. So far, Mexico, Canada, and the EU have done little to retaliate against the United States for levying 25% tariffs on steel and 10% tariffs on aluminum.
One food processing plant explained to Wisconsin Public Radio that the cost of the tariffs will add $.02 per can to their production. That doesn’t sound like a lot of money until you realize it will leave the company with $25 million in lost revenue each year.
While Trump has focused much of his efforts on curtailing what he sees as unfair trade, most mainstream economics have long argued that the deficit is not the proper precursor to gauge economic health. They argue that the value of a nation’s currency and how much its citizens save is more important.
Trump is correct in part of his assessment. He has noted that China has engaged in intellectual-property theft, dumping steel and other manufactured goods, tightly controlling its currency, and a variety of other questionable activities. For this, many experts agree China is a bad player.
Where Trump undermines himself is his efforts to curtail trade with Canada, where regulatory, labor and environmental frameworks remain similar to the United States.
Experts at the Duluth Seaway Port Authority, say they are waiting to understand the long-term effects of Trump’s tariffs. They move a lot of grain from the Great Lakes to the EU and are uncertain of the effects the increase in American agricultural products will have on exports.
For now, we will have to sit back and wait for Trump’s trade war to take hold.