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Thursday could be the most important day of the trade war between the United States and China, as a period of consultation on the imposition of new tariffs on China by the Donald Trump administration comes to an end.
President Trump's consultation analyzed the opportunity to set tariffs on Chinese products destined for the United States, worth about $ 200 billion, or about 40% of all exports to the United States. United States. Trump himself, who spearheads the trade war, is supposed to impose the tariffs. Rates would be set at 25%.
Placing tariffs on the $ 200 billion worth of Chinese goods would be the biggest escalation of the trade dispute to date and would be almost guaranteed to provoke further escalation in the form of Chinese government retaliatory tariffs.
Beijing has already threatened to impose tariffs on $ 60 billion worth of US goods, and reiterated Thursday morning this position with the spokesman of the Ministry of Commerce, Gao Feng, saying that China "will have to respond". prices.
If China faced the threat of retaliation, it would probably push the Trump administration to consider moving towards the ultimate threat of the president: tariffs on all goods from China.
Trump has already made it clear that he would be willing to apply tariffs on all Chinese goods bound for the United States, telling CNBC in an interview in July that he was "ready to go to 500". The number "500" refers to some $ 500 billion worth of Chinese products imported to the United States in 2017.
According to data from the US Census Bureau, the official figure for last year was $ 505 billion.
"I do not do it for politics – I do it to do the right thing for our country," he said at the time. "We have been scammed by China for a long time."
Such a move would end the titanic trade battle between the two countries, while Chinese imports from the United States are relatively small ($ 129.9 billion).
Economists say that a generalized trade war, with tariffs on all goods between the two countries, would result in substantial price increases for US businesses and consumers. A trade war of this magnitude would also lead to US economic growth and, more likely, wider global growth.
While the Trump administration's decision on a new tariff series is emerging, there is further evidence that the trade war in its current state is already causing major problems at the global level. partly on the trade war.
"Orders in the manufacturing sector have slowed significantly since the beginning of the year, after a very dynamic second half of 2017," said the German Foreign Ministry.
"The global uncertainty caused by trade disputes has probably played a role here," the ministry added.
It is not confirmed exactly when a decision on the new rates will be announced, but return to Business Insider later in the day to find out.
