China and the US Tariff War
Last week, President Trump announced that the U.S. will put 25 percent tariffs on $50 billion worth of Chinese goods starting July 6. President Trump says it is his responsibility to close the $375 billion U.S. deficit in goods traded with China, and that these tariffs help even out the global trade playing field. These tariffs come at a time when the Chinese government is looking to increase its advanced manufacturing capabilities, posing a larger threat to the U.S. and other industrialized nations.
Here are five facts you need to know about these new tariffs:
1. What Chinese industries are targeted in the new tariffs? Goods that will be subject to the tariffs are ones that involve “industrially significant technologies,” according to a press release issued by the Trump administration. The BBC reports that this will affect more than 800 product categories, from commercial dishwashers to plastics to robotics. Many of the tariffed products are part of the Made in China 2025 program, Beijing’s push to move the Chinese economy towards more advanced manufacturing.
2. What does President Trump say is the basis for these tariffs? President Trump says the Chinese are stealing intellectual property, which puts U.S. companies at a disadvantage in the global economy. For example, Voice of America reports that the Chinese government has required American companies to transfer technology to its national companies as a precondition of doing business in the country. The Chinese government has also mandated that American companies store sensitive data on the Chinese mainland, making it vulnerable to cyberattacks.
3. How is China threatening to respond? Beijing responded promptly to the U.S. tariffs by imposing its own duties on American goods. Over 500 American products ranging from electric cars to orange juice to cigars will be taxed an extra 25 percent. The Chinese government has also threatened to impose an additional 100 tariffs, which will be announced at a later date.
4. What is the response from Congress? So far, the reaction on Capitol Hill seems mixed. Sen. Ron Johnson (R-WI) and other Republican leaders have said the tariffs could hurt the country’s economy. Across the aisle, Democratic Sens. Joe Manchin (W.Va) and Chuck Schumer (N.Y.) say they could help their constituents who have been hurt by international trade.
5. What’s at stake? Combined, the U.S.’s and China’s new tariffs will affect $100 billion worth of goods traded between the countries. Right now, it remains to be seen how these sanctions will impact business. The tariffs could give American businesses a leg up in the global economy. Or they could continue to create uncertainly for U.S. entrepreneurs who rely heavily on international trade. According to Bloomberg News, some companies have already delayed capital projects, while others are waiting to see how this affects business over the coming months.
No Labels is an organization of Democrats, Republicans, and independents working to bring American leaders together to solve problems.
