In January, President Donald Trump threatened a 10% tariff on Chinese imports, which has now escalated to 125%. China has retaliated with an 84% tariff on US imports and has promised further countermeasures. Both countries are engaged in a tit-for-tat trade war, sparking fears of a global recession.
China, despite its own economic challenges, is unlikely to back down first in the tariff battle. The US is more dependent on Chinese imports than vice versa, with consumer goods being the main items imported by the US from China. The cost of goods like iPhones could rise significantly due to the tariffs.
China has diversified its trade partnerships since Trump’s first trade war in 2018, reducing its dependence on the US. Suggestions of further retaliatory measures include suspending cooperation on fentanyl control and banning Hollywood films in China.
While China has advantages in the trade war, such as its ability to absorb price increases on industrial goods, its stock markets are falling and domestic demand remains a challenge. The deteriorating US-China relations are likely to impact other areas beyond trade.
Analysts predict that Beijing will not back down in the face of Trump’s tariffs and rhetoric, as the two countries navigate an increasingly tense relationship. Ultimately, the implications of the ongoing trade war extend beyond just economic consequences.
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