President Donald Trump on Thursday announced, seemingly out of nowhere, that effective Sept. 1 the United States would add tariffs on $300 billion in Chinese goods.
The move ends the fragile, monthlong truce between the U.S. and China established in June, and it comes on top of existing tariffs on $250 billion in Chinese imports. This, the third round of tariffs, is likely to hit consumers harder than the previous ones because it includes smartphones, clothes, toys and more. All Chinese goods in those categories entering the United States will be subject to some sort of duties.
This sudden move is already affecting the stock market; the escalation in trade tension had major indexes falling Thursday. One broker told the Wall Street Journal that he’s “bracing for more mayhem” as we wait to see how China will respond.
Meanwhile, President Trump was also set to make a trade-related announcement to the European Union on Friday.
Reportedly it is about opening up European markets for more U.S. beef exports.
If President Trump wants a robust, healthy economy and long-term success, springing these big levies on China, the second-largest economy in the world based on GDP, is a terrible strategy. China can hardly be expected to sit back and do nothing.
Not surprisingly, China’s foreign ministry in Beijing said Friday that if the United States didn’t change course it would be forced to take countermeasures.
And perhaps the worst part is that we still don’t really know what the end game is. When will it stop? Or will it stop?
Perhaps these brash, risky moves served Trump well in the private business sector, but he’s not playing with his own money any more. In government they just seem reckless.
We’d prefer a more careful, strategic approach, especially where China is involved.