As tariffs on $34 billion worth of Chinese goods took effect at 12:01 a.m., the Chinese government shot back with tit-for-tat 25% duties on 545 U.S. goods, including agricultural staples such as soybeans, corn, pork and poultry. Meanwhile, President Donald Trump threatened to impose even bigger tariffs than the additional tariffs he had threatened already.
As the BBC reports, Trump on Thursday said that the amount of Chinese goods subject to tariffs could rise to more than $500 billion. Quoth he: “You have another 16 [billion dollars] in two weeks, and then, as you know, we have $200 billion in abeyance and then after the $200 billion, we have $300 billion in abeyance. Okay? So we have 50 plus 200 plus almost 300.”
But the Chinese were focused on what has actually transpired.
“A spokesperson at China’s Ministry of Commerce said Friday that while the Asian giant had refused to ‘fire the first shot,’ it was being forced to respond after the U.S. had ‘launched the largest trade war in economic history,’” reports CNBC’s Sam Meredith.
“‘This act is typical trade bullying,’ the spokesperson said, before adding: ‘It seriously jeopardizes the global industrial chain... hinders the pace of global economic recovery, triggers global market turmoil and will affect more innocent multinational companies, general companies and consumers,’” Meredith adds.
“The financial jousting prompted concern over rising costs for a wide range of goods,” write Danielle Paquette and Emily Rauhala for the Washington Post. “For industries that are directly impacted by the tariffs, the impact will be immediate and big,” Yanmei Xie, a China policy analyst at Gavekal Dragonomics, an economic research firm in Beijing, tells them.
“But it’s the risk of escalation — specifically Trump’s $500 billion dollar threat, which would cover nearly all of China’s exports to the U.S. — that has analysts worried,” Paquette and Rauhala continue.
“The key is whether there will be more — a second round of revenge and retaliation and a third round,” says Shi Yinhong, a professor of international relations at Renmin University in Beijing.
So far, actually, the impact of the war of words has barely trickled down to either the markets or the farmers and workers who may eventually suffer. The Shanghai Composite index was up slightly, and Japan’s Nikkei had a 1.1% gain today.
“While Chinese state media have slammed Trump's protectionism and on Friday likened his administration to a ‘gang of hoodlums,’ the trade conflict has gained little traction on China's tightly controlled social media, not cracking the 50 top-searched topics on the Twitter-like Weibo platform,” report Reuters’ Christian Shepherd and David Lawder.
That said, “the escalation of the trade war from threat to reality is expected to ripple through global supply chains, raise costs for businesses and consumers and roil global stock markets, which have been volatile in anticipation of a prolonged trade fight between the United States and almost everyone else,” Ana Swanson writes for the New York Times.
The Times’ Patricia Cohen takes an in-depth look at the effect of the rising price for stainless steel on Accu-Swiss, an Oakdale, Calif.-based company that produces parts for devices and machines used in the biomedical, food and semiconductor industries. Although it uses steel produced in the U.S., its price has risen as companies such as Accu-Swiss gobble up supply in the wake of tariffs imposed on imported steel and aluminum on March 23.
“Many businesses in other sectors, including apple growers in Washington, hog farmers in Minnesota and Harley-Davidson in Wisconsin, are scrambling to adjust,” Cohen writes.
Soybeans are “at the heart” of the war with China, point out Megan Durisin and Sam Dodge for Bloomberg. “The oilseed, used to make cooking oil and animal feed, accounts for about 60% of the U.S.’s $20 billion of agricultural exports to China. If China retaliates with 25% tariffs, American shipments may drop by at least $4.5 billion, according to a study by the University of Tennessee.”
That study, by Andrew Muhammad and S. Aaron Smith, determined that China accounted for 57.3% of U.S. exports, including nearly $22 billion in U.S. soybeans last year. Chinese soybean imports surged from $2.3 billion to $40 billion from 2000 to 2016 — an increase of more than 1,600% — as demand for soybean meal to feed animals exploded.
“Chinese retaliatory tariffs are aimed directly at U.S. farmers — a big source of Trump support — as are tariffs from the European Union and Canada over metals trade. So far, Farm Belt support for Mr. Trump remains strong, but that could change over time as farm prices and sales slump,” write Bob Davis and Lingling Wei for the Wall Street Journal.