Link: https://www.cbc.ca/news/business/u-s-raises-tariff-on-chinese-imports-to-25-per-cent-1.5127405
Posted: May 08, 2019 (article written by Thomson Reuters)
Summary: The United States will raise tariffs to 25 per cent from 10 per cent on $200 billion worth of Chinese imports. The change comes as Chinese Vice Premier Liu He goes to Washington for trade talks, setting up a last-ditch bid for progress toward a deal that would avoid a sharp increase in tariffs on Chinese goods. U.S. officials have accused China of breaking a contract in the past week on substantial commitments made during months of negotiations to end their trade war, prompting Trump to set a new deadline to raise tariffs on $200 billion worth of Chinese goods to 25 per cent from 10 per cent. U.S. President Donald Trump said on Wednesday he would be happy to keep tariffs on Chinese imports in place, adding that China is mistaken if it hopes to negotiate trade later with a Democratic presidential administration.
“Guess what, that’s not going to happen! China has just informed us that they (Vice-Premier) are now coming to the U.S. to make a deal. We’ll see, but I am very happy with over $100 Billion a year in Tariffs filling U.S. coffers,” he added. China’s exports fell unexpectedly in April, adding to pressure on Beijing ahead of the negotiations with Washington over Chinese technology ambitions. Earlier this week Trump sent global financial markets plunging with a surprise threat of more penalties on Chinese imports. April exports sank 2.7 per cent from a year ago to $193.5 billion US, a reverse from March’s 14.2 per cent growth, customs data showed. Imports rose four per cent to $179.6 billion, rebounding from the previous month’s 7.6 per cent decline. Imports of American goods fell 26 per cent from a year earlier to $10.3 billion. Exports to the United States, China’s biggest foreign market, were down 13 per cent at $31.4 billion.
Stakeholders and how different organizations can be affected:
USA Economic growth: It will go up because now they will be able to receive more tariffs on China’s imports. As Donald Trump said that “I am very happy with over $100 Billion a year in Tariffs filling U.S. coffers” means they will receive about $100 Billion a year only in tariffs.
China’s Economic growth: It will go down because of the increase in tariffs and now they will be paying more tariffs on their imports.
Imports of China: As a result, imports rose four per cent to $179.6 billion, rebounding from the previous month’s 7.6 per cent decline.
Imports of America: Imports of American goods fell 26 per cent from a year earlier to $10.3 billion.
Exports of China: China’s exports fell unexpectedly in April. They are down 13% at $31.4 billion.
Unemployment: Probably, it will go up in China because of the fall in economic growth.
Goods and services: China may increase the prices of goods and services (that they are importing) because of the tariffs.
Consumer Spending: It will fall because if they rise the prices, lower and middle class people will not be able to spend more on consumer goods.
GDP growth: Consumer spending and unemployment rates might affect GDP growth and as a result, it will go down.
Personal Opinion: I think this will affect other countries too because USA and China are world’s biggest economies and it will affect their trade market. China is highly populous and the increase in tariffs might affect their employment rates, prices of goods and services, consumer spending and their economic growth. On the other hand, America’s economic growth will go up because now they will be able to receive more tariffs on Chinese imports.
Question: If you are a Chinese government, would you continue your trade (imports and exports) with America? Why or why not?
Economics 12 