$60B in Tariffs for China
Trump’s had enough of China’s trade practices
Yesterday, President Trump slapped a 25% tariff on some Chinese products imported to the U.S. and added restrictions on Chinese investment in American tech firms. The U.S. will also bring a formal case against China to the World Trade Organization.
What's the reason?
China requires American firms operating in their market to partner with a Chinese company, effectively transferring all trade secrets and technology to China. The Chinese government also actively hacks U.S. firms and the American government to steal technology and know-how. These practices, plus the nearly $400B trade deficit we run with China, have Trump a little miffed - his administration has labeled China an “economic enemy”.
China seems down for a trade war
China announced they’ll “fight to the end” and encouraged Chinese consumers to boycott American products. Traders are spooked. U.S. markets were down 2.5% today on the news. Lawmakers and pundits were mixed, though, and the divide in opinion isn’t squarely along party lines.
Yahoo Finance: Trump's China tariffs aren't crazy
Pro-tariff folks argue that, in the long run, a tough approach on China will be best for America and preserve American jobs. They point out that we’ve been giving China valuable expertise and technology for decades, helping a rival develop economic and military force that may be used against us. Negotiation hasn’t stemmed the flow of information, they say, so it’s time to get tough - even if it risks a costly trade war.
Anti-tariff folks acknowledge that China steals American technology and that it’s a serious problem - but they don’t like Trump’s solution. They argue that tariffs will hurt American consumers in the form of higher prices. They also believe retaliation from China will hurt American industries and cost jobs, especially in transportation firms and agriculture which are big U.S. export categories to China.
Are tariffs the answer?
Oh boy, who knows - it's hard to predict how tough China will be in return. This one is a bit like North Korea: a serious problem that’s been dealt with delicately for decades, but has never been solved. And, as with North Korea, we don’t yet know if Trump’s tough-guy approach will work. There’s a lot at stake here. A full-blown trade war would surely be catastrophic, but maybe it’s time for a tougher approach if we are thinking about the long-term.
Trump: Did someone say 'trade war'?
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