As the deadline for a 90-day hold on increased tariffs on Chinese goods approaches this Tuesday, the future state of this decision hangs in the balance. While official discussions late last month suggested an expected extension of the deadline by 90 more days, the final call rests in the hands of U.S President Donald Trump. Still, no public declaration has been made on whether the President would support an extension or move forward with the escalated tariffs. The unpredictable situation has left the corporate sphere in a state of uncertainty, with a potential hike in import duties having the capacity to stir international markets.
President Trump’s inconsistent shifts in terms of deadlines and tariff rates have impeded efforts to predict Tuesday’s outcomes. Both U.S. and Chinese parties have yet to reveal their intentions for this significant day, amplifying the state of suspense surrounding the matter. If the deadline towards an agreement on trade with China were extended, it would avert the looming threat of exorbitant tariffs potentially reaching a staggering 245%.
The amplified tariffs are seen as a strategy to offset the extensive and long-standing U.S. trade deficit with China. This deficit plunged to a 21-year nadir in July, owing largely to the impending threat of tariffs affecting Chinese export activities. While it’s commonplace for the U.S. to share insights into the status of negotiations, the Chinese customarily withhold announcements until significant resolutions have been achieved.
As of this moment, the Chinese authorities have abstained from making any premature remarks regarding the impending deadline. The U.S. Vice President, JD Vance, hinted in an interview that President Trump is contemplating supplementary tariffs on Beijing, guided partly by China’s oil procurement from Russia. However, he clarified there had been no solid decisions made by the President just yet.
If prohibitive tariffs were to be imposed on Chinese exports to the U.S., it could cause substantial strain on Beijing. Especially now, as the world’s second-largest economy is still in the process of recuperation from a sustained slump in its property market, such a move could cause further destabilization.
The persisting effects of the COVID-19 pandemic, leading to a dependence on temporary, gig-based work, have severely stifled the employment sector. Increases in import taxes on smaller packages from China have already detrimentally impacted smaller manufacturing units, hastening the pace of job cuts.
The U.S. is significantly dependent on Chinese imports for a wide array of goods, ranging from everyday household items and attire, to high-tech resources like basic computer chips, batteries for electric vehicles, and the rare earths required to produce them. This heavy reliance equips Beijing with a strong strategic advantage in ongoing negotiations with Washington.
Despite potentially increased tariffs, China continues to maintain a competitive stance for several products. Chinese leaders are aware of the gradual manifestation of the impacts of raised costs due to earlier tariff inflations on the U.S. economy.
Currently, imports from China are subject to a basic 10% tariff, plus an additional 20% related to the issue of fentanyl. Some goods, however, are taxed at an even higher rates. In contrast, U.S. exports to China are faced with tariffs averaging around 30%.
Before declaring a pause in hostilities, President Trump hinted at the possibility of enforcing a substantial 245% duty on Chinese imports. In response, China counteracted by proposing a hike in its tariff on U.S. products to 125%.
A trade conflict between the globe’s two economic powerhouses holds substantial implications for the worldwide economy. This includes, but isn’t limited to, impacts on international supply chains, fluctuations in the demand for commodities such as copper and oil, and repercussions on geopolitical matters like the ongoing war in Ukraine.
Following a telephonic conversation with Chinese leader Xi Jinping, President Trump expressed his anticipation for a meeting later in the year. This development suggests a motivation to reach a constructive resolution with Beijing.
However, should both parties fail to maintain the current ceasefire, there’s a risk that the trade conflict could exacerbate, potentially leading to even more prohibitive tariff levels. Such a scenario could inflict greater hardships on both economies and have destabilizing effects on global markets.
In the face of escalated trade tensions, enterprises might become cautious in committing to investments and expanding their workforce. Furthermore, this could potentially result in inflation surges.
The post Future of U.S.-China Tariff Hike Uncertain appeared first on Real News Now.
About Author
