Eli Ridder | CANADA
U.S. President Donald Trump has led the United States deeper into a trade war with the international community by formally installing a 25 per cent tariff on China on Friday that affects $34 billion in goods that received a tit-for-tat retaliation from Beijing shortly after the levies were triggered.
Despite initial market confusion that dropped a few of the country’s stock values over whether China’s ruling Communist Party had actually installed the tariffs, a later confirmation by Beijing affirmed that the trade escalation was going ahead.
The Chinese government accused Washington of triggering the “largest-scale trade war”, reported Reuters news agency, as the pair of super economic world powers go head-to-head in only the latest trade war the Trump administration has started.
At 12 a.m. on June 1 of this year, Washington slapped levies of 25 per cent on steel imports and 10 per cent on aluminium imports on the European Union, Canada and Mexico–causing major backlash from traditional U.S. allies.
Just hours before the U.S. levies were thrown on over 800 Chinese products that included industrial machines, medical devices and auto parts, Mr. Trump threatened to go further, warning that his administration may end up targeting $500 billion.
If the U.S. went to that level of levies, it would strike around the total amount of U.S. imports from China in 2017, reported Reuters.
Analysts warned before and on Friday that the trade war has started and an escalation to $500 billion USD from the Trump administration would have a string impact on both countries.
“Trade war is never a solution,” China’s premier, Li Keqiang, said during a press conference with Bulgaria’s prime minister ahead of a summit with 16 central and eastern European nations.
“China would never start a trade war but if any party resorts to an increase of tariffs then China will take measures in response to protect development interests.”
There are no renewed negotiations between the two countries and even though financial leaders only predict that there will be modest escalation this summer, some will not rule out an unconstrained trade war that could spark a recession.