China has hit the US with 25 percent tariffs on US$50 billion worth of US goods, as the two countries step closer to a full-blown trade war.
The tariffs apply to a range of US products, including automobiles, aircraft, beef, soybeans, whisky, and chemicals.
The move comes a day after the US announced tariffs on 1,333 types of Chinese products – valued at an identical US$50 billion – mostly in the industrial and high-tech sectors. Those tariffs are widely considered a response to China’s controversial Made in China 2025 industrial policy, which has drawn the ire of the US government.
China’s deputy finance minister, Zhu Guangyao, reiterated China’s position that it does not want a trade war, but will retaliate proportionally to US tariffs. Earlier this week, China slapped tariffs on US$3 billion worth of US products in response to US tariffs on Chinese steel and aluminum.
Business Intelligence from Dezan Shira & Associates
China’s latest tariffs will mostly damage the US automobile and agricultural sectors. However, US businesses across all sectors face uncertainty in both the immediate and the longer term, as political disputes interfere with standard operations.
On the other hand, other countries may benefit from the tariffs on US goods. Australia, Canada, and the EU, for example, may see their automobile, wine, and agricultural products become more attractive to Chinese consumers as a result of tariffs on US products.
Nevertheless, the descent into a trade war between the world’s two largest economies poses wide macro-economic risks. And while the trade dispute has primarily been centered on China and the US thus far, other countries may be pressured to get involved as relations strain.
For a complete list of China’s latest tariffs on US goods, please click here (link in Chinese).
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