China’s response in imposing $3 billion tariffs on U.S. imports was seen as rather ‘modest,’ but it should not have been taken lightly, as the Chinese government on Friday announced its intentions to play hardball. China intensified the trade war with news that they will be raising tariffs on 128 U.S. products coming into the country.
These products included fruits, wines, pork, nuts and recycled aluminum. This development has not only affected the S&P 500 Index in the U.S. but has taken a toll on the stock market in Japan and China. On Friday, Tokyo’s Nikkei fell by 4.5 percent and China’s Hang Seng by 2.5 percent.
While it is clear President Trump has no intentions of squashing this impending trade war, China is actually open to resolving the friction. Clearly, China is not afraid to retaliate, however the country is giving the U.S. opportunities to reconsider its position.
China plans to raise tariffs in two phases. The first being an increased 15 percent on tariffs for 120 goods worth almost $1 billion only if the U.S. does not want to reach a ‘trade compensation agreement’ within a particular period of time. The second being a 25 percent tariff imposed on eight products from the U.S. with a market value of almost $2 billion after there has been an evaluation of the impact of the tariffs.
The World Trade Organization (WTO) is urging both countries to rethink their decision and come to an amicable solution to settle their differences using mechanisms specified by the WTO.
The bigger issue with this impending trade war is the effect it will undoubtedly have on a global scale. Trades, not to mention economies, to as far as the Caribbean will be affected.
However, Trump sought to quell fears that the increased tariffs will be imposed on other countries. But anything is possible with President Trump. He describes China as a ‘friend’ to the US but is still targeting that one country.
How do you think this impending trade war may affect Jamaica’s economy?
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