Tariff Hikes Escalate US-China Trade War, lead to Economic Losses
Last updated on September 9th, 2020
On Tuesday, the trade dispute between the world’s two largest economies escalated with tariff hikes from both the sides. The ongoing US-China trade war has been going on from a long time, as both the countries have been continuously placing tariffs worth billions of dollars on each other’s goods, leading to economic losses.
Recently, the countries seemed close to a deal and people started expecting a relief from the trade tensions. However, the talks aimed at resolving the conflicts broke down. The US officials’ raising of the existing 10 percent tariffs on $200bn (£154.9bn) worth of Chinese goods to 25 percent on Friday was seen as an uninvited trouble by China. The latter backed out from a few of its promises, inviting further tariff hikes.
In retaliation, China also increased existing tariffs on about $60 billion of US imports effective from June 1, leading to a hike in the trade war between both the countries.
US President Donald Trump responded optimistically to the hike, tweeting:“When the time is right we will make a deal with China. My respect and friendship with President Xi is unlimited but, as I have told him many times before, this must be a great deal for the United States or it just does not make any sense. […] It will all happen, and much faster than people think!”
Earlier the Chinese foreign ministry accused the US administration for forcing Beijing to increase the volume of goods it was willing to buy from the US as part of an agreement, violating terms struck in December.
“The US arbitrarily raised its asking price”, said a spokesperson for the foreign ministry. “The hat that… violates promises is absolutely not on the Chinese head.”
President Trump’s tweet on May 5 that stated about the increased tariff to 25 percent, led to a decline in stocks of both the US and China. S&P 500, American stock market index, shifted to 3.8 percent while the Chinese CSI 300, sinked to 6.9 percent.
Amidst the increasing trade tensions, many have quit investing in the market, while others are still confident that both the sides would eventually reach a deal.
To prevent further decline in stocks, both the US and Chinese Presidents would bring active measures to deal with the problem in G20 meeting, scheduled next month. The associated loss of trust on both the sides has led to the never-ending trade war. It is high time that the government should focus again on the slower economic growth that has led to a higher consumer prices and rising unemployment in the country.
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