The Trump administration imposed a 25 percent tariff on $34 billion of imports from China just after midnight Thursday, and Beijing promptly retaliated with duties on an equal amount of American products. It accused the U.S. of igniting “the biggest trade war in economic history.”
These initial tariffs are unlikely to inflict serious harm to the world’s two biggest economies, experts say. Gregory Daco, head of U.S. economics at Oxford Economics, has calculated that they would pare growth in both countries by no more than 0.2 percent through 2020.
But President Donald Trump, who has boasted that winning a trade war is easy, has said he is prepared to impose tariffs on up to $550 billion in Chinese imports — a figure that exceeds the $506 billion in goods that China shipped to the U.S. last year.
“Trade disruption is the greatest threat to global growth,” said Dec Mullarkey, managing director of investment strategies at Sun Life Investment Management. “The direct effects will be amplified as business confidence drops and investment decisions are delayed. Markets are still hoping that the key players return to the negotiation table.”
The root of the conflict is the Trump administration’s assertion that China has long used predatory tactics in a drive to supplant America’s technological supremacy. Those tactics include cyber-theft as well as forcing companies to hand over technology in exchange for access to China’s market. Trump’s tariffs are meant to press Beijing to change its ways.
Trump is also sparring with the European Union over his threat to tax auto imports and with Canada and Mexico over his push to rewrite the North American trade pact. And he has subjected most of America’s trading partners to tariffs on steel and aluminum.
Many caught in the initial line of fire — U.S. farmers absorbing