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Trump just intensified his trade war with China

The president wants to impose an additional tariff on $200 billion in Chinese goods amid already tense relations.

President Donald Trump and Chinese President Xi Jinping
Neither President Donald Trump nor Chinese President Xi Jinping seem like they will back from their stance on trade anytime soon.
Xinhua/Lan Hongguang/Getty Images
Madeleine Ngo covers economic policy for Vox. She previously worked at the New York Times, the Wall Street Journal, Bloomberg, and the Philadelphia Inquirer.

President Donald Trump is escalating his ongoing trade war with China — by threatening to add tariffs to $200 billion worth of Chinese goods.

The proposed 10 percent tariff would hit a number of Chinese products, including fish, vegetables, coal, and handbags. The proposed tariff will be subject to a public hearing from August 20 to August 23.

Just last week Trump imposed a 25 percent tariff on $34 billion worth of Chinese imports. China immediately retaliated by imposing its own tariffs of the same weight.

Now, in response to the new threat, China has said that it will take Trump’s “trade bullying” to the World Trade Organization, which intervenes in trade disputes.

“The American side’s behavior harms China, harms the world and also harms itself,” China’s Ministry of Commerce said in a statement to the New York Times on Tuesday. And with no clear end or compromise in sight, tensions between the leaders of the world’s two biggest economies will probably continue to escalate.

Trump thinks trade wars are easy to win. That’s debatable.

The White House in March first threatened China with tariffs because Trump thinks China uses dirty trade tactics. Among other things, the Trump administration has claimed that China forces foreign companies to spill American technology secrets in order to do business with China. Trump has claimed that he would even go as far as to impose tariffs on $450 billion worth of Chinese products.

When the first round of tariffs were imposed by the US on Friday, the New York Times reported that global stock markets were largely unaffected, but American farmers and smaller US manufacturers, like soybean farmers, suffered.

Several US politicians have come out against the tariffs, saying that Trump’s trade dispute with China is dangerous. Sen. Orrin G. Hatch (R-Utah), chairman of the Senate Finance Committee, said he supported punishing China, but that this was a “reckless” approach.

“We cannot turn a blind eye to China’s mercantilist trade practices, but this action falls short of a strategy that will give the administration negotiating leverage with China while maintaining the long-term health and prosperity of the American economy,” Hatch said in a statement on Tuesday.

Trump insists trade wars are “easy to win” because the US has a significant trade deficit with China. Last year China imported $130 billion in goods from the US, while the US purchased about $500 billion in items from China. Put together, this means that Trump could impose additional tariffs on Chinese imports, but China might not be able to match this with import taxes on US goods that would be of the same magnitude.

Yet that doesn’t mean Trump should shrug off the risks of a trade war with China.

China has already retaliated with claims that it would take “qualitative measures” to hit back at the US. Among other things, this means that Beijing could slow down the production of American goods manufactured in China, or it could encourage consumer boycotts, which wouldn’t fare well for US manufacturers.

The White House continues to stand by its trade threats, though — and hasn’t shown any sign that it plans to back down.

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