U.S. and Chinese government leaders failed to negotiate a trade deal late last week, spurring another round of tariffs on imported goods.
On Friday, President Donald Trump increased tariffs on $200 billion worth of Chinese goods to 25%, up from 10%. This latest round of import taxes mostly impacts consumer goods, such as car parts, appliances and household items.
The Chinese government said today it will respond by increasing tariffs on U.S. imports to 20%-25%, up from 10%, if a deal is not reached by June 1.
China and the United States have imposed tit-for-tat tariffs on billions of dollars' worth of goods coming from each country since last summer. Trump has said the taxes on Chinese goods are an effort to pressure the government into improving trade relations with the United States and better protecting U.S. intellectual property.
Trump and Chinese President Xi Jinping agreed in December to take a 90-day reprieve from any new tariffs and resume negotiation talks in the spring.
In a tweet today, Trump said: “I say openly to President Xi & all of my many friends in China that China will be hurt very badly if you don’t make a deal because companies will be forced to leave China for other countries. Too expensive to buy in China. You had a great deal, almost completed, & you backed out!”
Stephen Slifer, an economist and author of the NumberNomics newsletter, said that while the Chinese economy will be hit much harder than the U.S. because it relies more heavily on trade, the latest round also will impact U.S. businesses and consumers alike.
“The first round (of tariffs) hit businesses and the materials they use in production. This one will hit consumer goods and therefore be much more visible to all of us, not just in S.C. but around the nation,” Slifer said in an email. “When you and I go shopping for almost anything from cars to bikes to toasters that are made in China, we will see it reflected in the form of higher prices.”
Slifer added that it is hard to know how long the tariffs will last.
In response to the latest tariffs on Chinese goods, the Chinese Ministry of Commerce said in a statement: “The escalation of trade friction is not in the interests of the people of the two countries and the people of the world. China feels deeply sorry for that. If the U.S. tariff measures are implemented, China will have to take necessary countermeasures.”