By Prarthana Mitra
US President Donald Trump signed an executive memorandum on Thursday that will set the stage for tariffs worth $60billion on Chinese import. Shortly after the announcement, the Chinese government requested the United States government to pull back from the brink of a possible trade war and posted a list of 128 U.S. products as retaliation targets.
The Trump administration claims the measures were designed to penalise China for unfair trade practices, including, theft of intellectual property.
The escalating tensions between Beijing and Washington have been palpable in financial markets worldwide are likely to have grave consequences for the global economy if trade barriers between the two leading economies go up.
China can and will retaliate, eye for an eye
Trump’s memorandum will be followed by a 30-day window for potential negotiation or consultation on which Chinese products to target before the tariffs are finally unveiled.
In a response published on Friday, China urged the US administration to be prudent in times like these, when maintaining the sanctity of bilateral trade relations is crucial to global economic welfare.
The Chinese trade and commerce ministry said, China doesnt hope to be in a trade war, but is not afraid of engaging in one.
Targeting $3 billion of U.S. imports, China has drawn up a list of 128 U.S. products that could be hit with tariffs if the two countries are unable to reach an agreement on trade issues, the ministry said. These include wine, fresh fruit, dried fruit and nuts, steel pipes, modified ethanol, and ginseng. According to the ministry, those products could see a duty of up to 15%, while a 25% tariff could be levied on pork and recycled aluminium goods.
Trump’s protectionist America?
Trump’s protectionist stance seems to be pushing towards reducing the record trade deficit the United States has with China. According to a commentary published by the official Xinhua news agency, China thinks the United States is adopting a “Cold War mentality” over China’s economic progress and responding by such measures.
Trump, however, appears intent on fulfilling election campaign promises to reduce the record U.S. trade deficit with China. A commentary published by the official Xinhua news agency said the United States had adopted a Cold War mentality, and panic over Chinas economic rise was driving Washingtons confrontational approach.
A full-blown trade war between the two countries will not only spell trouble for their economies but also for all the countries supplying to them, the global ramifications of which will be very hard to predict.