While most analysts say the latest tariffs will likely have only a minimal effect on the USA or Chinese economy for now, they stand to inflict real damage, in the United States and perhaps globally, beginning next year. Trump may be "trying to force US companies to change their supply chains and reduce their reliance on China", said Robert Holleyman, a partner at the Crowell & Moring law firm and a former deputy USA trade representative. The US has threatened to withdraw from the WTO, and has imposed tariffs on imports from Mexico, Canada, the European Union and - most severely - China.
President Donald Trump said the latest round of tariffs was in response to China's "unfair trade practices", including subsidies and rules that "require foreign companies in some sectors to bring on local partners".
Trump officials perceived the offers from Beijing-largely involving more Chinese purchases of USA agricultural and other products-as inadequate in addressing the White House's demand for a fairer playing field for American businesses in China.
Trump has warned further retaliation from China will see the United States put duties on all U.S. imports from the Asian economy.
Washington had announced on Monday (Sept 17) that the USA will begin to levy new tariffs of 10 per cent on US$200 billion of Chinese products starting on Sept 24, with the tariffs to go up to 25 per cent beginning 2019.Trump has threatened duties on a further US$267 billion of made-in-China goods, which would hit nearly all other consumer products including mobile phones, shoes and clothes. For Trump, those could include key constituencies, such as consumers who are accustomed to buying lower-priced goods made in China.
As for the impact of tariff actions on supply chains and consumers, the feedback has largely been that they will raise prices and do more harm than good at the end of the day to be sure.
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Secondly, he added that U.S. companies will stay dependent on Chinese suppliers, because "for numerous affected goods, there are few alternative suppliers".
The race is on to get Chinese goods into the US before President Donald Trump's tariffs bite. The National Retail Federation in the US warned that duties will lead to higher prices and even product shortages. But many other industries lobbied for protection, and Congress agreed. Some of the exported parts are imported back to us in the completed cars. That escalation could spur US companies to pre-emptively load up on those goods, too, Deutsche Bank said in a report this week.
At the start of the trade tariffs, most suppliers interviewed by Marketplace expressed optimism that the U.S.
However, China and other U.S. trading partners have targeted their retaliation to inflict pain in politically sensitive areas, including in areas that Democrats hope take from Republicans in November. They are likely to balk at meeting any USA demands that would slow the high-tech drive. The U.S. has reached an agreement with Mexico on changes to the agreement, but has yet to do so with Canada. Mr. Trump's aides, nevertheless, say they want "serious talks". Doing it quickly will make things volatile and somewhat scary, but that may not be the case were it done in the long run, but he said in the long run there could well be another 2009-like crisis, which could be worse than last time. He believes President Donald Trump's latest round of tariffs has dampened the chance of the US making any truce with China and thinks the tariff decision emerged from disagreements within the cabinet.
"Trade is not a weapon and can not be used for wars", he added.