Washington: President Trump announced new tariffs on Chinese goods saying that the United States is suffering a loss of $500 billion per year in the trade with China and the United States would not tolerate it henceforth. The blow Trump delivered at a time when the US-China trade negotiations are in the final phases had severe repercussions all around the world. The stock markets in all the major countries including the United States and China, experienced severe turmoil following the announcement and the crude prices fell. The Chinese delegation scheduled to visit the United States for further negotiations has reportedly cancelled the trade talks.
US President Donald Trump indicated the intensification of the trade war with China, through the successive tweets he posted on social media. President Trump issued a warning to hike the tariffs on Chinese imports saying that ‘China is paying a tariff of 25% on goods worth $50 billion and 10% on goods worth $200 billion. The amount is partially responsible for the better economic performance of the United States. Nonetheless, the goods with previous tariff at 10% will henceforth be receive tariffs at 25%.’
President Trump indicated that the trade war would intensify saying ‘Other than the imposed tariffs, no other tariffs have been placed on Chinese goods worth $325 billion imported into the US. However, now that too will attract a 25% tariff. The tariff hike on Chinese goods has not affected the cost of production significantly. Also, China was reaping its benefits.’ Trump alleged that although the trade negotiations are being held with China, they are progressing at a slow pace and China is prolonging the process by changing its stand all the time.
Only last week, the media and the officials of both countries indicated that the trade negotiations were in its final phases. A Chinese delegation of 100 officials led by Deputy Prime Minister Liu was ready to visit the United States. Albeit, the jolt Trump delivered just as the commission was about to leave, has created a sensation at the international level along with the US and China.
The sources in China have indicated that the trade negotiations would be cancelled. Although there was no official announcement on it, the US media has informed that their claim was based on Chinese sources. Additionally, the report stated that the Chinese officials were infuriated by Trump’s warning as also one of them indicated that China would never negotiate with a ‘gun pointed to its head’ whereas some warned that the country would soon retaliate against the US action.
Severe repercussions of the US President’s threat were felt over the global economy. The stock markets in both the nations, the United States and China, crashed and was observed to be the most significant crash for the Chinese stock market in the last three years. As per reports, the investors in China have started selling the Chinese Yuan on a large scale. Even the crude rates declined by 2.5% in the international market, to settle below $70 per barrel.
Last year, President Trump had initiated the trade war with the announcement of tariffs on Chinese goods. After realising the adverse effects on the Chinese economy, the country shifted its position to compromise on the issue. However, the stance is only proving to be a measure to stall while the new Trump warning indicates the trade war entering a decisive phase.