Rising Tide of Tariffs: The Trade War Continues

In our last blog about the trade war, we said that “Until America and China stop puffing out their chests and work this out, I’m afraid things are only going to get worse before they get better.”

Sure enough, things have gotten worse.

President Trump has imposed even more tariffs against Chinese goods, bringing the total to $250 billion, roughly half of all Chinese imports to the US. As can be expected, China has struck back by increasing their own tariffs against US imports, and even cancelled an upcoming trade discussion, refusing to speak any further until America relents. China may be going silent, but President Trump is continuing to be very vocal on the matter, announcing he’s willing to impose another $267 billion in tariffs, effectively imposing increased taxes on all Chinese goods.

President Trump’s reasoning is that, since these tariffs will make Chinese imports so expensive, comparatively cheaper American-made goods will increase in sale, and all the money spent on them will remain within the country’s own economy. Investing in home-grown goods is all fine and dandy, but considering how many American goods are produced with imported resources, the price of American products is sure to rise in kind.

Mind you, President Trump hasn’t forgotten that trade is a two-way street. He knows that for all the money going out of the country when spent on imports, there is still money coming in due to the sale of exports. However, he’s also well aware that the US buys far more from China than it sells to them, and he’s trying to use it to his advantage.

The Chinese economy depends on its sales to America, that’s a fact, and that’s what’s making this such an uphill battle for China. Despite imposing their own tariffs in retaliation, China has little to gain and so very much to lose from this trade war, yet they’re stuck in it with no way out.

Of course, they’re not the only victims.

The entire global economy is already feeling the repercussions, and many of the tariffs have yet to go into effect. Even US-based companies have urged President Trump to lift his tariffs, telling him over and over that his plan won’t work and that he’s hurting American business more than he’s helping it, but their pleas fall on deaf ears.

Trump has planted his feet, and the international trade market risks crumbling beneath his heel.