In the News

Trump's Trade Wars: Round Two

Penny Brooks

3rd April 2018

After the US imposed tariffs on imports of steel and aluminium, it was inevitable that China would retaliate fast.

They have introduced duties of up to 25% on 128 American imports worth $3bn (£2.1bn). 

Those tariffs went into effect on Monday, targeting US goods including frozen pork, nuts, fresh and dried fruit, ginseng and wine. 

Beijing said the additional duties are “in order to safeguard China’s interests and balance the losses caused by the United States additional tariffs”; their focus is to prevent the EU and Japan from joining the US side in trade disputes, as reported in the FT.

The US is using national security laws to impose their tariffs, which it says are needed to protect US producers - watch this FT pro-free-trade video for an explanation of why that may not work: 'Donald Trump: Man of Steel'. 

They are expected to add tariffs on intellectual property later this week - the Analysis section of this BBC article is particularly helpful in explaining the issues relating to Chinese regulations on IP, and why foreign investors in China are obliged to surrender some or all of their IP. 

With the Dow Jones share index in the US immediately falling by around 2%, American producers are worried about the Trade War that their president has called for. "The direction of what the US government is doing ... is the right one, although I don't think tariffs is the best way to go," said William Zarit, chairman of the American Chamber of Commerce in China. 

Mr Zarit told the BBC that members of his organisation, which represents more than 900 companies operating across China, including Intel, Dell, Honeywell and Coca-Cola, were encouraged to hear that top officials have started talking again. "I think it shows that both sides want to solve this before it gets out of hand," he said.

There are plenty of American companies to be hit and other nations, especially those in Europe and Asia, could soon find themselves dragged into this conflict. 

Penny Brooks

Formerly Head of Business and Economics and now Economics teacher, Business and Economics blogger and presenter for Tutor2u, and private tutor

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