U.S.

A-China Trade War

U.S. hits China with New

Tariffs
 U.S hits China with Tariffs
• As US-China trade war getting worse day by day as both countries do not
reach to a conclusive agreement, there are more chances of tariff war
between two countries. Dispute which started in 2018 is not coming slow
and affecting the global markets badly.

• Now U.S imposes a new wave of heavy tariffs on Chinese products. Donald
Trump imposes tariff of 15% from September 1st. on many Chinese
products worth $300 billion. This move come after China’s impose of 5%
duty on U.S crude oil (Sukar 2019).

• U.S. claim is that China is doing unfair trade practices by not following
international trade standards. China is using fraudulent means in
intellectual property, market access and transfer of illegal technology in
China. However China alleges that U.S is afraid of China’s rise as economic
super power and wants to curb it (Kaur 2019).
 U.S hits China with Tariffs (Cont.)
• U.S also increases tariffs on multiple Chinese products in October which
made total duties on these products from 25% to 30%. Economic analysts
urged that trade war between U.S and China could adversely affect both
countries however it will affect China more by almost 5% to 10% (Fatma
2019)
• Another phase of tariffs is expected to hit in December on those Chinese
products which were not affected before. In response China will also impose
duties on around 300 U.S products.
• "The tariff rate could go all the way up to 45%, those are the goods that do
the most damage to China and the least collateral damage to the US."
Analyzed by strategic thinkers (Fatma 2019).
• Current wave of tariffs also affect the average households in U.S because
most of the imported items are household items like shoes, clothes, nappies
and dishwashers etc. It is estimated that average household expenses would
increase by $800 as result of current increase in tariffs (Houser 2019).
Donald Trump on Tariff Hikes Policy
• "Our Country has lost, stupidly, Trillions of Dollars with China over many
years. They have stolen our Intellectual Property at a rate of Hundreds of
Billions of Dollars a year, & they want to continue. I won’t let that happen!
We don’t need China and, frankly, would be far better off without them."
Donald Trump tweets as he announced new tariff hike policy for China
(Sukar 2019).

• Donald Trump series of tweets on the issue clearly tells his future action as
he further said, "The vast amounts of money made and stolen by China from
the United States, year after year, for decades, will and must STOP. Our great
American companies are hereby ordered to immediately start looking for an
alternative to China, including bringing your companies HOME and making
your products in the USA. I will be responding to China’s Tariffs this
afternoon. This is a GREAT opportunity for the United States.“ (Sukar 2019)
 Investors Reaction on Tariff Hike

• Investors and U.S based companies respond differently to U.S government

actions on too much tariff hikes on Chinese products. Opinion of companies
is that such increase in tariffs is not affecting China more than it is affecting
them as they argue that U.S companies have to pay all these extra charges.
By paying these duties there cost of goods increase and profit margin
shrinking. Nike said that tariff increase would increase price of footwear in
coming season which is extra burden on households. (Houser 2019)

• Investors were cautioned in making their opinion as they wanted this trade
war to be settled. But recent series of tweets by Donald trump shocked them
and further panic hit the market. It affects the stock exchanges as index fall
by around 2.5% in a single day which shows pressure on the market.
 Industry Reaction on Tariff Hike
• Retail Industry Association fears about the effects of this long
running trade war and they urge Donald Trump to end this war.
Association members insist that trade war is harming their
business as their cost is increasing. Current wave of price hike
will increase their product cost by 30% as local industry is not
able to produce goods and raw material in such lower price
(Sukar 2019).

• Farmers are also affected badly in new hike as they were

affected in last year as result of China’s close of contract for
importing soybean from U.S. Pork industry is angry over recent
crisis as China is favorite market for pork sellers (Kaur 2019).
China’s Reaction on New Tariff Hike

• China’s reaction on recent tariff hike was similar to previous hikes as China also
increases tariffs by 5% to 10% on September. China also announces to increase
tariffs on some U.S products on December in response to U.S announcement of
hikes in tariffs (Houser 2019).
 
• “The U.S. measures have led to the continuous escalation of China-U.S. economic
and trade frictions, which have greatly harmed the interests of China, the U.S. and
other countries, and have also seriously threatened the multilateral trading system
and the principle of free trade,” responded by China on current hike in tariffs by
Donald Trump (Fatma 2019).
 
• China’s response is a surprise move for U.S President Donald Trump as he was
expecting China might not react on correct sanctions by U.S because of its reluctant
economy.
 References
 
• Sukar, A., & Ahmed, S. (2019). Rise of trade protectionism: the case of
US-Sino trade war. Transnational Corporations Review, 1-11.
 
• Fatma, A., & Bharti, N. (2019). Perception vs. reality: understanding
the US–China trade war. Transnational Corporations Review, 1-9.

• Kaur, A., & Gupta, G. (2019). An Insight into the Status QUO of US-
China Trade War. The Management Accountant Journal, 54(9), 81-86.

• Houser, K. (2019). The Innovation Winter Is Coming: How the US-

China Trade War Endangers the World. San Diego Law Review, 57(3).