Trump’s Latest 10% Tariff on $200 Billion Worth of Chinese Goods Forces China to Reconsider “Tit for Tat” Stance in US-China Trade War


This Tuesday, President Trump announced a set of ten percent tariffs on 200 billion dollars worth of Chinese goods annually, slated to take effect as of next week. This newest tariff marks the pinnacle sort of speak in Trump’s recent slew of threats; in July, the president imposed tariffs on 34 billion dollars worth of Chinese products, a tax China matched dollar for dollar. In August, the U.S. levied tariffs on an additional 16 billion dollars worth of imports from China, a threat again matched by China. Trump’s announcement marks the first time China has been unable to match the U.S.’s proposed tariff, signaling a critical turning point in the US-China trade war.

Trump’s latest move has stripped China of a critical bargaining chip; China doesn’t import even close to enough from America to match Trump’s 200 billion dollar tariff threat in U.S. goods. This doesn’t even begin to cover the additional $267 billion in Chinese products Trump has threatened to tax should China retaliate, notes Keith Bradsher, Shanghai Bureau Chief for the New York Times.

The recent tariff announcement has left China “confused,” in the words of Raúl Hinojosa-Ojed, trade specialist at UCLA. Chinese officials have threatened to impose tariffs on 60 billion dollars worth of U.S. products, representing nearly all the goods China purchases from the U.S. in an economically dangerous last ditch attempt at retaliation. Still, Hinojosa-Ojed reflects, “[the officials] don’t know what to do. They worry that the tit for tat model is playing into Trump’s hands.”

Trump said of the tariffs: “China has been taking advantage of the United States for a long time, and that’s not happening anymore.”

Despite China’s inability to match Trump’s new massive tariff, its leaders are eager to persist in defending China in the escalating trade war. Lou Jiwei, Head of China’s social security fund, has advocated for an alternative, potentially more debilitating form of protest: forcing Chinese companies to stop exporting critical parts to U.S. businesses, leaving American companies unable to replace crucial products manufactured predominantly in China.

Jiwei’s proposal, however appealing, is not the answer when it comes to defending China in response to Trump’s escalating tariff threats. Going forward with Jiwei’s plan to cut U.S. companies off from key supplies would only cause Trump to go through with his even more severe proposal of an additional $267 billion tariff, not only crippling the Chinese economy, but also stripping China of its last playing card. Cutting U.S. companies off from supplies altogether will only unleash an even more drastic slew of tariffs, debilitating China even further.

This trade war extends beyond just the Trump administration. Many Democrats who disagree with the majority of Trump’s agenda still support his hardline stance on trade with China, meaning that regardless of whether the incumbent president is reelected, the fate of U.S.-China trade remains unclear.

In a kind of damage control, a new approach has been advocated within China to focus on appeasing tensions and actually lowering Chinese tariffs given that the country simply can’t retaliate with another dollar-for-dollar tariff match. Still, China’s options are few and far between. While Chinese officials have threatened to import soybeans from countries other than the United States, finding an equivalent replacement will be difficult.

China should be wary in taking more drastic steps to counter Trump’s hardline trade stance. Shutting down factories and boycotting American products could critically endanger many Chinese jobs, let alone damage China’s reputation as an international business giant.

The problem is that defensive moves on China’s part will do little to deter Trump’s attack. Some have proposed weakening Chinese currency against the dollar, making Chinese goods cheaper in the U.S., therefore allowing China to offset tariffs. This move, however, would only make China’s imports more expensive, backfiring and leading to what the New York Times calls a “potentially damaging flight of money out of the country.”

If China imposes excessive tariffs, it could cripple itself as well. Soybeans and microchips, goods China heavily relies on, would become increasingly difficult to import from the U.S., hurting the Chinese economy. Trump’s tariffs are already hurting China, as it derives a significant amount of profit from its smartphone, chemical, and clothing sales to the U.S., a profit that Trump’s tariffs directly endanger. Imposing more tariffs on U.S. goods in retaliation would only deprive China of critical resources, while further provoking the Trump administration in this seemingly endless trade war.

China has begun to offer the U.S. concessions, lowering tariffs on imported cars, for example, from 25% to 15%. This has done little to appease the Trump administration, however, which wants the figure down to 2.5%. China is even letting foreign companies own a greater share of its domestic companies and banks.

Truly ending the massive trade war currently plaguing both the U.S. and China isn’t a matter of simply negotiating tariffs. Either way, bidirectional tariffs hurt both countries; they make it harder for each country to gain valuable resources it can’t produce itself and make it harder for companies to gain much-needed business overseas. With Chinese tariffs on U.S. goods and U.S. tariffs on Chinese goods, respectively, China loses key commodities like soybeans it normally procures from the U.S. while at the same time, loses potential profit from smartphone sales in America. Similarly, the U.S. loses key smartphone and clothing manufacturing from China while simultaneously losing profits on selling goods like soybeans.

Economist Yu Yongding of the Chinese Academy of Social Sciences reflects, “The United States wants to hurt China by imposing tariffs on Chinese exports. “In the end,” he concludes, the victim might be “the United States itself.” If China attempts to levy massive tariffs in return, it will end up hurting itself too. In order for both countries to avoid crippling their economies, both China and the U.S. must realize that continuing the tariff war is not the answer. The trade war must end.

Meera Santhanam

Meera Santhanam is a sophomore at the University of Chicago majoring in political science and biology. She is also incredibly interested in Japanese and US-Japan relations.
Meera Santhanam

About Meera Santhanam

Meera Santhanam is a sophomore at the University of Chicago majoring in political science and biology. She is also incredibly interested in Japanese and US-Japan relations.