The long term impact of a tariff war with china may lead the United States down a challenging path. President Trump’s 10% tariff on Chinese products went into effect on Tuesday, Feb 4th with the goal of pressuring Beijing to crack down on fentanyl shipments into the United States. China has since formulated a response of their own as the Chinese government announced additional tariffs on liquified natural gas, coal, farm machinery and other products from the United States. China has also implemented restrictions on the exports of certain critical minerals, most of which are used in the production of high tech products. These restrictions on critical minerals is coming in at a crucial time as the United States and China are in an active AI production race.
This tariff war could cause a multitude of issues down the line whether it be supply chain issues, uncertainty for businesses, and higher costs for consumers on products. Though all of these are an issue, a bigger problem comes from China’s ongoing goal of becoming the leader of global trade. China’s BRI (Belt and Road initiative) aims to enhance their influence by investing in infrastructure and trade routes across Asia, Europe and Africa. In the event that China were to succeed with the BRI and become the leader of global trade in the long run, it would be hard to imagine their government forgetting about the United States’ attempt to strong arm them through tariffs.
The country that comes out on top of this tariff war has only won part of the battle in the grand scheme of things, as the main fight remains to be who will be at the top of global trade in the long run.
Article link for China’s Retaliations to Trump tariffs.
https://www.nytimes.com/2025/02/04/business/economy/trump-tariffs-china.html
How will the long-term effects of this tariff war shape the global balance of economic power between the U.S. and China?
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