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The consequences of the U.S. and China trade tariffs

Recently, President Donald Trump has threatened tariffs on Chinese goods. In response, China has threatened plans for heavy tariffs on U.S. goods if Trump follows through. This is the most recent blow in the increasingly antagonistic trade relationship between the U.S. and China.

A list published by the Trump administration on April 3 included about 1,300 Chinese exports, a total of $50 billion worth of goods, that could potentially be targeted with a 25 percent tariff. On April 5, Trump upped the stakes in response to what he called China’s “unfair retaliation” to earlier trade actions, according to Reuters. Trump ordered U.S. officials to seek out additional tariffs against Chinese goods, imposing another $100 billion in tariffs against China. Many of the tariffs would target Chinese aerospace, technology and machinery industries. Others target medical equipment, medicine and educational materials.

The Chinese embassy in the United States released a statement that said China “strongly condemns and firmly opposes” the proposed tariff list. Additionally, Reuters reports that China’s commerce ministry spokesperson, Gao Feng, called U.S. action “unjustified” and claimed no negotiations were likely in the current circumstances. “The result of this behavior is to smash your own foot with a stone,” Gao told during a news briefing in Beijing. “If the United States announces an additional $100 billion list of tariffs, China has already fully prepared, and will not hesitate to immediately make, a fierce counter strike.”

Some believe Trump should pull back his threats for the sake of American businesses. CNN cites U.S. business advocates such as Myron Brilliant, the executive vice president of the U.S. Chamber of Commerce, an advocacy group that has long opposed Trump’s trade policy.

“The administration is rightly focused on restoring equity and fairness in our trade relationship with China,” Brilliant said. “However, imposing taxes on products used daily by American consumers and job creators is not the way to achieve those ends.”

Trade wars are usually reactive. Often, once one is imposed, the automatic response is for another country to impose a tariff of their own. These responses often escalate and have long-term, unpredicted consequences. In the 1960s, European markets were flooded with cheap American poultry. The demand for pricier European chickens plummeted, and in order to protect their own chicken farms, France and West Germany imposed a tariff on American chicken imports. In 1963, President Lyndon B. Johnson imposed a 25 percent tariff on potato starch, dextrin, brandy and light-duty trucks. Johnson’s tariff is often called the chicken tax, which undercuts the lasting effects it had. The chicken tariff eventually went away, as did many of the retaliatory U.S. tariffs, but the automobile tariff continued and remains to this day. A report by CNN Money states these tariffs are often credited with the rise of U.S. manufacturers and their dominance of the truck industry. Unfortunately, some say these same tariffs also sheltered U.S. manufacturers and haven’t forced them to innovate.

Trump announced tariffs on steel and aluminum as part of his campaign promise to crack down on rising Chinese dominance. These tariffs, however, threaten to harm the farms and agricultural producers of America’s heartland, a place known for small town communities, rural heritage and hard work. The heartland also leans conservative, and the Republican party relies on the very blue collar workers they may ruin. Trump’s trade tariffs have drawn criticism from his party.

Furthermore, the agricultural belt that was once a staple of Trump’s base have the most to fear from China’s threatened tariffs. Goods such as soybeans, corn and other foods from America’s heartland have been specifically targeted. This conflict of interest will be particularly challenging for the Republican party as a whole, the New York Times reports. In a year in which Republicans are already struggling to maintain their hold on the House and the Senate, the GOP must choose between its loyalty to their Republican president and its constituents. States such as Illinois, Iowa, Arkansas, North Dakota, Indiana, Missouri and Montana are all facing destructive tariffs, and are up for political grabs. To save millions of Americans, Trump will have to strike a balance between trade tariffs and more compromising trade deals.

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