The trade war between the United States and China is intensifying and is getting worse as both countries continue to slap tariffs on each other.
In a latest move that proved there was no sign of compromise from either side, the U.S. imposed fresh taxes of 10 percent on a list of 5,745 Chinese imports worth $200 billion. In a retaliatory measure, Chinese customs agency slapped a 5 – 10 percent tax a list of 5,207 American goods worth nearly $60 billion.
The feud stems from a Commerce Department investigation that was launched last year on direction of the president. The department wrote in the report that steel and aluminum imports are "weakening our internal economy" and therefore "threaten to impair" national security.
Therefore, the commander-in-chief took the findings of the report as the basis of the hefty tariffs and, since then, the issue has been escalating.
Many within the administration said the report needed more work and believed it was one-sided as it didn’t take into consideration the negative impact the taxes would have on jobs that are dependent on cheap steel and aluminum the country imports from other countries.
As a result, the tariffs not only created tensions between the two biggest world economies but also created chaos within the Trump administration.
The president has faced opposition on the decision from Treasury Secretary Steve Mnuchin and senior economic adviser Larry Kudlow. However, Trump ignored all concerns of his adviser and went ahead with the tariffs.
Now, Mnuchin and Kudlow are fighting to not only defend the president’s actions but are also looking at possible solutions to overcome the rising tensions.
As the current situation shows, economic analysts fear it could push the global economy into a great depression. More than 1,100 leading economists across the U.S. are concerned the worst economic downturn in the history of industrialized Western world will make a comeback if Trump isn't thwarted from imposing outrageous trade policies.
While trying to explain the kind of adverse effects the tariffs could possibly have on the economy, experts drew a parallel between Smoot-Hawley Tariff Act, which started the U.S. on the path to the Great Depression, and Trump’s tenure.
The commander-in-chief defends his draconian tariff measures by asserting he is trying to protect the country’s industries. That is exactly what Smoot-Hawley tariffs claimed to do, but it massively backfired.
The taxes not only harm the Chinese but are also damaging to the U.S. economy.
They raise prices for consumers, hurt the livelihood of American farmer, “injure the great majority of citizens,” including construction, transportation and public utility workers, along with professionals who produce nothing that could be protected by trade barriers.
The extreme measures which were initiated by the United States have also raised tensions on a diplomatic level.
In a latest move, Chinese admiral canceled a scheduled visit to the United States just 48 hours before the planned meeting.
“We were informed that Vice Adm. Shen Jinlong has been recalled to China and will not conduct a visit with Chief of National Operations Adm. John Richardson. We have no additional information at this time,” Pentagon spokesman Lt. Col. Dave Eastburn told CNN in a statement.
The two naval leaders were supposed to meet on the sidelines of the International Seapower Symposium at the Naval War College in Newport, Rhode Island.
Moreover, Trump and his Chinese counterpart President Xi Jinping are not expected to speak on the sidelines of United Nations General Assembly (UNGA). But the two world leaders might meet at the sidelines of the G20 summit which is scheduled for November in Argentina.
However, only time will tell if the meeting will take place or not.
Banner/Thumbnail: Reuters, Nicolas Asfouri - Caitlin Ochs