5 things to know about Trump’s escalating trade war with China


President Trump has now levied tariffs on about $250 billion worth of Chinese goods, escalating a trade war between the world’s two largest economies.

“It’s time to take a stand on China,” Trump said Thursday in an interview with Fox News. “We have no choice. It’s been a long time. They’re hurting us.”

{mosads}Trump’s first batch of punitive measures, over the summer, imposed 25 percent tariffs on $50 billion in Chinese imports. On Monday, $200 billion in tariffs are slated to take effect — a 10 percent duty that is slated to rise to 25 percent next year.

China has retaliated in kind, first matching the $50 billion and then levying $60 billion in this latest salvo, bringing its total to $110 billion. Trump has said he plans to impose duties on all U.S. imports from China, in response to Beijing’s continued retaliation.

That would mean duties on $267 billion in goods from China, which would more than cover all of its exports to the U.S. and eventually hit American consumers in their pocketbooks.

Here are five things to know about Trump’s trade war with China.

Tensions are rising, rising, rising

Trump’s near-constant threat of more tariffs has ramped up tensions with Beijing, putting the global trading system on edge and making it difficult to negotiate with Chinese officials.

The announcement of $200 billion in tariffs has derailed talks recently proposed by Treasury Secretary Steven Mnuchin.

Chinese officials announced early Saturday that they were canceling trade talks with the U.S. that were planned for next week amid escalating trade tensions, The Wall Street Journal reported.

U.S. and Chinese officials met in Washington last month but parted ways without laying the contours of a potential deal. Mnuchin has proposed getting those negotiations back on track but the Chinese say they won’t bow to U.S. pressure tactics. 

Senior administration officials say they have given China plenty of time to take action to stop their unfair trade practices, such as stealing U.S. intellectual property and technology, and opening their markets. But without changes the tariffs are necessary, they say.

The Trump administration says it wants to defend the nation’s long-term interests, even if it causes discomfort for U.S. consumers. Failure to act would hurt the U.S. economy more down the road, a senior administration official argued, according to news reports.

At the same time, Chinese Foreign Ministry spokesman Geng Shuang said the only way to resolve the China-U.S. trade issue is to meet at the negotiating table.

Tariffs haven’t had a big effect on American jobs and the U.S. economy — at least not yet

U.S. businesses, especially farmers and smaller firms, say the tariffs are already affecting them by requiring them to pay more for the same goods. Those extra costs, they say, will eventually need to be passed on to consumers.

Walmart sent a letter this month to U.S. Trade Representative Robert Lighthizer saying the company will have to raise prices if Trump keeps imposing tariffs on Chinese imports.

Despite the threat of a prolonged trade war, the U.S. economy has powered through the mounting tensions: job growth is solid; the unemployment rate is near a record low; Wall Street is chugging along and the economy grew at a 4.2 percent annual rate in the second quarter.

Business groups overall oppose tariffs, but they don’t want to spook consumers

Most companies have sounded the alarm on tariffs by mobilizing their trade associations to oppose Trump’s trade strategy.

Some small manufacturers are already laying off workers as supply costs rise, and family farms have lost crucial contracts to foreign competitors in key markets. Retailers, meanwhile, are raising prices to protect their bottom line.

EveAnna Dauray Manley, president of Manley Labs, a Southern California-based manufacturer of high-end recording studio audio equipment, said the tariffs are already putting heavy cost pressures on her company.

U.S. raw materials have shot up in price, and imported metals now cost at least 25 percent more than they did before the trade war began.

Manley said she expects sales in China to drop off significantly and lead to a loss this year of upward of $150,000 for her company, which has been in business for 30 years and has annual revenue around $4 million.

“Made in America means a lot to us,” Manley said. “Not only for my 25 employees, but all the local industry we support and their employees … metal fabricators, metal finishers, local suppliers/distribution, packaging suppliers.”

Still, business groups have tried to stay optimistic. U.S. Chamber of Commerce President Tom Donohue said he has faith in the White House and believed Trump would abandon tariffs once their costs slow the economy.

Tariffs “appear from time to time and they get to be a real drag on the economy and governments fix them,” Donohue said on Wednesday.

Donohue agreed that the administration has serious issues to resolve with China, but said there are less harmful ways to achieve better trade.

Trump has shown no interest in backing down, however, and U.S. firms have become increasingly concerned that the trade war’s end is far from sight.

The Federal Reserve said this month that many American businesses have scrapped plans to expand or invest in equipment amid the trade uncertainty, even as the economy grows.

The tariffs haven’t become a nationwide midterm issue

The trade war has not played a significant role in the run-up to the November midterm elections, despite its potentially dire implications for Trump’s base in the Midwest and the South. Republicans are campaigning on a strong job market and economic growth, while Democrats are focusing on Trump’s various scandals and their efforts to defend the Affordable Care Act.

Some races in the Midwest are seeing trade issues rise to the surface, benefiting Democratic candidates who are calling for action to stop Trump’s tariffs.

Sen. Heidi Heitkamp (D-N.D.), a vulnerable Democrat seeking reelection in a state Trump won in 2016, has blasted her GOP challenger, Rep. Kevin Cramer, for sticking by Trump as tariffs push the state’s soybean farmers out of foreign markets.

Powerful GOP political groups such as Club for Growth and the Koch network have refused to endorse Cramer’s bid because of his support for Trump’s trade policy. That could make the difference in what’s expected to be a tight and crucial race, not just for the state but for the Senate as a whole.

Next steps are unclear, to both sides

Trump says his tariffs “have put the U.S. in a very strong bargaining position.”

But the Chinese are refusing to engage in talks until the president rolls back the tariff pressure. Right now, no talks are on the agenda following Beijing’s decision to cancel talks next week. 

“Nothing the U.S. has done has given any impression of sincerity and goodwill,” Geng said at a news briefing Friday, according to the Journal.

“We hope that the U.S. side will take measures to correct its mistakes.”

Sources reportedly told the Journal that Beijing wanted to initiate talks with Washington next month. But Bloomberg News reported that it is likely nothing will happen until after the November midterms. 

Trump hasn’t promoted future talks, even as Cabinet members like Mnuchin try to reach out to Beijing. Mnuchin, however, isn’t expected to meet with China’s President Xi Jinping until November.

Any resolution appears off in the distance, meaning businesses and consumers will likely be dealing with uncertainty heading into 2019.

Tags Donald Trump Heidi Heitkamp Kevin Cramer Robert Lighthizer Steven Mnuchin
See all Hill.TV See all Video

Most Popular

Load more


See all Video