President Donald Trump‘s escalation of his tariff war with China has significantly disturbed the global economy.
What Happened: This week, Trump announced a 90-day pause on tariffs against most multiple countries, but simultaneously ramped up import taxes on China to a whopping 145 percent. In a countermove, China raised its own tariffs to 125 percent on Friday.
While Trump insists that China is keen to negotiate a deal, he remains uncertain about the process. On the other hand, Chinese leaders have put a cap on their latest tariff hikes, cautioning that the ongoing conflict could turn into a global economic farce.
The U.S. President’s strategy has raised questions about his ultimate goal and the potential economic repercussions of this escalating trade war. Trump is of the belief that the tariffs will reduce the trade deficit and bring back manufacturing jobs to the U.S.
“What’s the endgame here? Are we really going to reshore manufacturing based in China? And if we’re hitting every country on earth with additional tariffs, where are we going to see companies flee China to?” Marc Busch, a professor of international business diplomacy at Georgetown University told The Hill. “They’re not coming back to the United States, so what is the endgame here?”
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On Wednesday, Trump announced the latest tariff hike on China, increasing it after imposing a 104 percent rate that day. A White House official confirmed on Thursday that the rate is now 145 percent on China, factoring in an additional 20 percent that includes sectors the reciprocal tariffs do not cover.
Trump also implemented a 90-day reprieve from the “Liberation Day” tariffs against all other trading partners, which brought immediate relief to the stock market. He attributed this decision to China’s disrespect towards the World’s Markets.
In response, China’s Ministry of Finance accused the U.S. of violating international economic and trade rules, and disregarding the post-World War II global economic order. Beijing then increased tariffs on U.S. goods to 125 percent on Friday and declared it would cease participating in the tariff hike exchange.
Why It Matters: Despite the ongoing conflict, the U.S. and China continue to be significant trading partners. In 2024, the two countries traded an estimated $582.4 billion, according to data from the U.S. trade representative’s office.
The trade deficit with China was at $295.4 billion, up 5.8 percent from the previous year. This escalating trade war could have far-reaching implications for both economies and the global market at large.
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