A new round of tariffs on Chinese goods entering the U.S. was announced on Twitter last week by President Trump, further escalating the trade conflict between the two countries. For months, China and the U.S. have tried to reach an agreement that would benefit both countries, yet that goal has remained elusive. The global economy has already felt the implications of these new tariffs; the day they were announced, the Dow Jones Industrial Average dropped 200 points and the value of the yuan, China’s currency, fell.Here are five facts on the new tariffs placed on Chinese goods:
1. According to The Wall Street Journal, President Trump just imposed a new, 10 percent tariff on $300 billion worth of Chinese imports that currently are not taxed. The New York Times reported that this round of tariffs, combined with those previously outlined, will encompass virtually all Chinese goods entering the United States, or roughly $540 billion worth of goods and commodities.
2. The new round of tariffs was announced following Treasury Secretary Stephen Mnuchin’s and U.S. Trade Representative Robert Lighthizer’s recent return from Shanghai, where Chinese officials were not able to offer viable solutions to mitigating the trade war. Monday, following the Trump administration’s announcement that another round of tariffs would begin September 1, Chinese leaders responded by allowing the yuan, China’s currency, to weaken, reducing the cost of its exports and raising the cost of imported American-made products.
3. More than 40 percent of clothes, 60 percent of consumer electronics, 70 percent of shoes, and 88 percent of toys sold in the United States are made in China, according to NPR. These items, which have not yet been affected by the trade war, will all but certainly be included in the new round of tariffs imposed by the White House. The Office of the United States Trade Representative is now compiling the final list of goods that will be subject to these new tariffs.
4. In September, a Chinese delegation will arrive in Washington to resume trade talks to attempt to break the current impasse. It is likely that the talks in September will address topics that have been long-standing issues between the two countries, including forced technology transfer, intellectual property rights, nontariff barriers, and agriculture.
5. If the trade war persists, additional interest rate cuts may be necessary. Last week, Fed Chairman Jerome Powell announced that for the first time in more than a decade the institution would cut interest rates. At the time, Chairman Powell alluded to the ongoing conflict with China as contributing to this action being taken.
