EMAILED ON July 9, 2018 BY Lindsey Quinn

China strikes back with $34B worth of tariffs on US goods

They said they would, and they did.

Following through on their promise to retaliate against the Trump administration’s 25% tariff on $34B worth of Chinese imports announced last month, China levied — shocker — a 25% tariff on $34B worth of US exports.

The new Chinese tariff affects 545 US exports including pork, bourbon, cotton, tobacco, propane, and soybeans (one US soybean ship on a month-long journey across the Pacific raced to make it to China before the 5pm deadline… but missed it by 30 minutes).

It’s only escalating… 

The whole thing feels like a face-off for a UFC fight. Last Thursday, Trump said he planned to roll out an additional tariff on $16B of Chinese goods “within the month,” and China doesn’t appear to be backing down any time soon, either.

China’s Ministry of Commerce has taken the stance that the US has “violated [World Trade Organization] rules,” calling the back-and-forth “the largest trade war in economic history.”

Meanwhile, Trump maintains that these tariffs are simply to even the playing field in a trade relationship that has been “very unfair, for a very long time.”

Businesses are caught in the middle

On the US front, some exports will be canceled immediately, leading to short-term revenue loss those for businesses.

But, it also makes the long-term outlook uncertain. Axios notes that the fluctuating restrictions make it difficult for bourbon makers and soybean farmers who have to plan for demand years in the future. 

The effects on consumers may take longer to see

NPR reports that about 60% of US-China trade involves “parts and supplies,” rather than finished products, so businesses making the products will feel the effects before consumers. Harley-Davidson is already moving some of its manufacturing overseas as a result of the US tariffs.

As a result, both US and Chinese consumers may want to anticipate price spikes in the near future.