Last week, the Trump administration increased the tariff rate on $200 billion worth of Chinese goods from 10 percent to 25 percent. This increased tax on nearly one-third of goods from the world’s second largest economy came after U.S. officials felt that China did not comply with past trade commitments. In turn, the Chinese government said it will take “necessary countermeasures.” It has already announced it will tax $110 billion of American products, according to the Huffington Post, but is running out of options for additional U.S. goods to tax due to the “lopsided trade balance.”
Here are five facts on the Trump administration’s tariffs on Chinese goods and what the economic future may hold:
1. The list of Chinese products that will face higher tariffs is 194 pages long, according to The New York Times, and includes almost 6,000 items. The Times reports that goods that suddenly may get more expensive include outdoor gear, dog collars, baseball mitts, ski gloves, Christmas tree lights, toilet paper, art supplies, and ceramic tiles. Items excluded from this list include clothing and highchairs.
2. Intellectual property theft is a major area of concern for the Trump administration. This past weekend, President Trump’s top White House economic adviser Larry Kudlow told Fox News this intellectual property theft needs to be addressed by the Chinese government, as well forced technology transfer and ownership of American companies and cyber interventions. He said the White House is also looking for strong enforcement provisions to ensure laws are abided.
3. When it comes to setting tariffs and regulating international commerce, the executive branch largely wields the power, according to Foreign Policy. In the past, President Trump has leveraged Section 232 of the Trade Expansion Act of 1962. This provision gives the president wide latitude for action when it comes to trade with foreign countries. And last year, Trump leveraged Section 301 of the Trade Act to apply tariffs to Chinese goods.4. According to Oxford Economics, the newly increased tariffs areestimated to cost the U.S. economy $29 billion and the global economy $105 billion by next year. These actions could reduce U.S. gross domestic product by 0.3 percent in 2020 and China’s exports by 0.8 percent.
5. While China has yet to announce how it will respond to the increased tariff rate, retaliation is expected. In addition to having raised taxes on $110 billion of U.S. imports, the country has also slowed customs clearance for U.S. companies and increasing regulatory oversight, according to The Guardian.
