- The trade war between the U.S. and China is escalating
- Tariff increased from the erstwhile 10 percent to 25 percent
- Both the American and Chinese stock markets dip
Trade tensions between the U.S. and China seem to be hitting the tipping point as on May 13, 2019, Beijing retaliated against Washington stating that it will increase tariffs on approximately $60 billion worth of U.S. goods from June 1 onwards. This according to a report by CNN.
The Dragon Hits Back
The U.S. finally seems to have hit the wrong chord with the Chinese as the latter announced Monday that it will increase tariff on $60 billion worth of U.S. goods from June 1, 2019. These goods include American cotton, machinery, grains, and aircraft parts. According to the official statement, more than 4,000 goods will be affected, the majority of which will carry tariffs to the tune of 25 percent – up from the previous 10 percent rate levied in September 2018.
Interestingly, this comes just a couple days after the U.S. increased trade tariffs on $200 billion worth of Chinese exports from 10 percent to 25 percent. President Trump is said to be not very pleased with the pace of trade talks between two of the world’s largest economies and has accused China several times for backtracking on its previous trade commitments.
While the waters remain muddy regarding the next step in the trade tariff war, Larry Kudlow, Trump’s top economic advisor, said on May 12 that there’s a “strong possibility” that Trump could meet the Chinese premier Xi Jinping at the G20 economic summit in Japan next month. Similarly, China’s trade negotiator, Liu He, said that another round of talks between the two countries is scheduled to happen during the last week of May.
The cascading effects of the escalating trade war between the two economic giants will no doubt be felt across the world.
Studies reveal that the ongoing trade dispute has largely hurt both the countries, slowing down their economic growth and stunting the local manufacturing industries.
The jolts of the tension were also felt in the markets as the U.S. Down slipped more than 600 points on Monday.