U.S. Contemplates Raising Customs Duties on Chinese Products to a Potential 245%
Tariff Tit-for-Tat: A New Round in the U.S.-China Trade War
The Trump administration has ramped up its war of tariffs against China, threatening to nearly double duties on Chinese goods to a whopping 245%. This move comes in response to China's plan to impose 125% tariffs on U.S. imports.
In a rather interesting twist, the White House also unveiled an investigation into the U.S.'s reliance on imported processed critical minerals and products made from them. This study aims to identify vulnerabilities in supply chains, quantify the economic impact of market distortions, and assess potential trade protection measures to secure stable domestic sources of these essential materials.
It's worth remembering that this trade war kicked off soon after Donald Trump took office. Within three months, this upheaval forced a tariff hike of over tenfold, setting a new rate of 125% as of April 9. As it stands, combined tariffs for China reach an unprecedented 145%.
China has mimicked Trump's movements, slapping tariffs on U.S. exports such as coal, LNG, crude oil, agricultural equipment, big American cars and pickups, Hollywood films, rare earth metals, and Boeing aircraft. In retaliation to the latest U.S. tariff rise, China issued an identical 125% tariff on all U.S. goods, ceasing further negotiations.
Current tariff levels have become untenable for the market, making it unfeasible for China to continue absorbing U.S. products meant for its market. According to a State Council document, the Chinese side will not dignify any additional U.S. tariffs on Chinese goods.
The World Trade Organization projects that this trade war could lead to a massive 80% decline in bilateral trade between the two countries, which represent approximately 3% of global trade.
In 2024, bilateral trade between China and the U.S. reached an astounding $688.28 billion. However, the majority of this was imports from China, with the U.S. importing goods worth only $163.62 billion.
On the multilateral front, over 75 countries—potential targets for U.S. tariffs—have approached the Trump administration for trade negotiations, leading to a suspension of these punitive measures.
Experts like Zhang Liqun, a research fellow at the Development Research Center of the State Council of China, believe that these U.S. tariffs will have limited impact on China's market but could isolate the American economy from the global one, detrimentally altering the landscape of economic globalization.
China, with its substantial domestic market, is well-equipped to withstand external pressures. Meanwhile, the U.S. stands to face significant economic challenges as a result of this trade war, including compromised decarbonization efforts due to dependency on Chinese critical minerals and green tech components [1].
The escalating trade conflict between the U.S. and China may give rise to competing economic blocs, potentially delaying efforts to address shared challenges such as climate change [1][3]. Alongside disrupting supply chains and reshaping trade relations, this bifurcation could stall progress on critical global issues. Stay tuned for updates on this evolving situation!
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References:1. The consequences of the U.S.-China trade war for climate change and decarbonization2. The outbreak of the US-China trade war redefines global trade, reshapes supply chains, and disrupts clean energy trade3. The trade war: harmful to global growth and development4. New data: U.S—China trade diversion during the trade war
- "I'm not sure if the escalating tariff war between the U.S. and China will truly ensure a separate economic bloc, but experts like Zhang Liqun believe it could isolate the American economy from the global one."
- "In the general-news, the U.S.'s tariffs on imported critical minerals could have a significant impact on the finance and industry sectors, potentially altering the landscape of economic globalization."
- "The trade war with China has led to tariffs on various U.S. exports, including crude oil, Hollywood films, and Boeing aircraft, which could compromise the decarbonization efforts in the future."
- "The increase in tariffs has made it difficult for China to continue absorbing U.S. products, as it could lead to a 80% decline in bilateral trade between the two countries, representing approximately 3% of global trade."
- "Politics and finance are closely tied to the tariffs, as China stands to face economic challenges, while the U.S. may isolate its economy from the global one, potentially delaying efforts to address shared challenges like climate change."
