President Donald Trump has denied that the US and China are engaged in a trade war, despite Beijing announcing it would slap import tariffs on American goods in a tit-for-tat move.
“We are not in a trade war with China,” Trump tweeted. “That war was lost many years ago by the foolish, or incompetent, people who represented the U.S. Now we have a Trade Deficit of $500 Billion a year, with Intellectual Property Theft of another $300 Billion. We cannot let this continue!”
The Chinese Finance Ministry announced this week that it would levy 25 percent import tariffs, worth $50 billion, on 106 American products in response to US levies on Chinese goods.
Products targeted include soybeans, automobiles, chemicals and aircraft. China will also impose levies on American whisky, cigars and tobacco, some types of beef, lubricants, and propane and other plastic products.
The news sent the stock markets into a tailspin, as the Dow plunged 600 points and the S&P Index dropped 2 percent. Soybean futures have dropped 3.7 percent, while the US dollar and the Chinese yuan are extending early losses.
Chinese markets are weathering the storm better than American ones. The Chinese government’s decision to retaliate was made after Chinese markets closed for the week.
The Chinese levies come after the US Department of Commerce announced 25 percent import tariffs – totalling $60 billion – on some 1,300 Chinese goods, aimed at curbing “unfair” trade practices.
According to the US Trade Representative’s office, the list of goods chosen “focuses on those products that would inflict maximum harm to Chinese exporters.” In return, Beijing has taken aim at Trump’s electorate, reportedly targeting goods from those US states that are considered a support base for the president.
The US trade deficit with China stood at $375 billion in 2017. Many of the imported goods are from American manufacturers, which send raw materials to China due to cheap labor. When the goods are shipped back to the US, they are considered imports in the trade balance.