ASSESSMENTS

Trump Tosses Out The Trade Rulebook With Latest Tariffs

Apr 6, 2018 | 22:41 GMT

A cargo ship carrying containers stops at Qingdao Port on April 6, 2018, in Qingdao, China.

A cargo ship carrying containers stops at Qingdao Port on April 6 in Qingdao, China. The United States has shown little fear of the consequences of escalating trade tensions with China far beyond what would be considered a typical dispute, and China has so far stood up to those escalations.

(VCG/VCG/Getty Images)

Highlights

  • The United States has proposed additional tariffs on China after Beijing responded to Washington's first moves, risking a full-out trade war.
  • China will be forced to respond in kind to some extent, but its strategy is likely to evolve toward a more nuanced approach.
  • Any tariffs won't be implemented for weeks, and both sides will try to increase their leverage in negotiations. Still, the United States' main demands shake the Chinese state structure to its foundation, making compromise a challenge.
  • The dispute between the world's two largest economies will have major secondary impacts, forcing many countries to either back the United States and risk a full-blown trade war, or back China and possibly destroy the global trading order they rely on.

U.S. President Donald Trump keeps nudging China toward a trade war. After markets closed on April 5, the White House announced in a press statement that Trump had directed U.S. Trade Representative Robert Lighthizer to consider increasing the amount of Chinese goods subject to new U.S. tariffs by another $100 billion in value. This move triples the severity of the $50 billion in tariffs that Washington announced on March 22, which Beijing responded to in kind earlier this week. If implemented, the new tariffs could mark the beginning of an all-out trade war between the world's two largest economies....

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