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).
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