As U.S. Readies Chinese Import Tax, Worries of Economic Impact Loom Large
*By Alisha Haridasani*
The first round of tariffs for American and Chinese goods goes into effect on Friday, officially plunging the two countries into a trade war that could end up undermining the U.S. economy.
The Trump administration is poised to impose taxes on $50 billion of Chinese imports in high-tech industries, such as robotics, aerospace, and industrial machinery, in an attempt to punish Beijing for intellectual property theft and to rebalance a trade deficit. The first phase of that will affect $34 billion worth of goods.
"The United States will be opening fire on the whole world and also opening fire on itself," said China's Commerce Ministry spokesperson on Thursday, reiterating that Beijing will fight back.
China has promised to immediately hit back with tariffs of “equal scale, equal intensity” on American soybeans, corn, wheat, rice, beef, and poultry.
President Trump announced the tariffs in June and since then the U.S. and China have been locked in a series of threats and negotiations that have rattled markets.
The back-and-forth has already forced companies to rethink their strategies. Chinese companies have started turning away from U.S. soybean suppliers and looking to other sources for agricultural products.
“Farmers in America’s heartland are already feeling the pain,” said Sara Hsu, economist and associate professor at SUNY-New Paltz. “Consumers can expect to feel the pain in the coming months.”
And enduring the pinch isn't going to pay off. Protectionism has historically proven to be destructive for the global economy and won’t achieve what the Trump administration is trying to accomplish, said Hsu.
The tariffs will hurt the American high-tech companies that Trump is trying to protect from intellectual property theft as it becomes increasingly difficult for those companies to do business in China, she said.
“Also, in terms of reducing the U.S.-China deficit, this is a point that I think the administration misunderstands,” she said. “A deficit is actually a good thing for the U.S. because we’re the world’s biggest economic power, and other countries are willing to hold our debt,” said Hsu. Reducing the deficit would signal that the global economy shouldn’t be investing in U.S. debt.
“We’re going to reduce our own power, it’s going to backfire on us.”
The trade spat with China is part of the president’s broader plan to renegotiate American trade deals with other countries. The U.S. has already levied tariffs on steel and aluminum imports from Canada, Mexico, and the EU, angering those allies and prompting them to retaliate.
Shots fired on that front have already claimed one American victim: Harley-Davidson. The motorcycle company announced last month it would move production out of the U.S. to get around the EU’s retaliatory tariffs.
For full interview, [click here](https://cheddar.com/videos/china-warns-u-s-on-trade).
The Cowboy State has become one of the world's top tax havens, according to the Pandora Papers, a trove of more than 11.9 million documents obtained by the International Consortium of Investigative Journalists and The Washington Post. The papers reveal, among other things, how ultra-wealthy people from around the world move money into the U.S., invest, and spend it under a shroud of secrecy. Allison Tait, University of Richmond law professor, joined Cheddar to talk about Wyoming's laidback tax laws, their impact on the nation's economy, and provided some details on the financial arrangement known as the "cowboy cocktail."
Carlo and Baker preview President Biden's address to the nation as Omicron becomes the new dominant Covid strain. Plus, Trump gets booed for getting his booster and the White House gets a new puppy.
China and Russia are saying they want to work closer together in different areas after a recent call between Presidents Xi Jinping and Vladimir Putin. What are the implications of a close partnership between Beijing and Moscow? Cheddar News breaks things down with expert Hagar Chemali.
Michele Schneider, Partner and Director of Trading Research & Education for MarketGauge.com, joins Cheddar News' Closing Bell, where she says the spread of the Omicron variant and Jerome Powell's comments following the latest Fed decision are spooking investors heading into the weekend.
Carlo and Baker wrap up another week discussing the latest explosion in new Covid cases in the Northeast, President Biden's stalled agenda and more. Plus, Love, Hate, Ate featuring the question: why did movie dialogue get so hard to understand?
Since July 2021, families with children have received monthly payments from the federal government as part of the expanded child tax credit, a policy that may be expiring this month. Megan Curran, policy director at the Center on Poverty and Social Policy at Columbia University, joined Cheddar News to discuss.
During the pandemic, student loan debt repayment was put on pause amid an unprecedented crisis. However, on February 1, 2022, the schedule is set to resume, and currently it looks as though the Biden administration has no plans to extend it. Cody Hounanian, the executive director of the Student Debt Crisis Center, spoke to Cheddar about why he believes the loan collection pause needs to at least be extended as borrowers are still struggling with the resurgent pandemic and inflation. "There's really no good economic or policy or political reason as far as why they're focused on getting payments started now," Hounanian said. "We surveyed 33,000 people with student loans last month. Nine out of 10 told us that they are not ready to resume payments."
As the 2022 midterm elections fast approach, here are some politicians Americans should be on the lookout for. Democratic Massachusetts state senator Sonia Chang-Diaz, who was the first Latina and Asian American woman to be elected to the state's senate, now has her eye on the governorship with Republican Charlie Baker leaving. New Jersey GOP candidate for Congress, Billy Prempeh also bears watching, and while Boston's newest mayor, Democrat Michelle Wu, was already sworn in last month, all eyes will be on Beantown as the first woman and first person of color to hold the office tries to usher in a new era for the city.
