Bob Davis
Donald Trump launched a two-year trade war against China during his first term in the White House, and he’s poised to do it again.
Even before being sworn in, Trump threatened China with 60 percent tariffs to cut its trade surplus, 10 percent tariffs if it didn’t halt fentanyl shipments and 100 percent tariffs if it tried to create a rival currency to the dollar. On his second day in office, he announced the first wave of tariffs would hit China on Feb. 1.
Of course, this may be bluster or a negotiating tactic. But with Trump you never know, which makes his tariff threats that much more effective. During the first trade war, he deployed tariffs on a scale not seen since the 1930s to try to get China to bend to his will and China replied in kind. U.S. tariff rates on Chinese goods rose six-fold to 19.3 percent, while Chinese tariff rates on U.S. goods nearly tripled to 21.1 percent, all of which shook markets, hurt U.S. companies that depended on those imports and lifted inflation somewhat.
The clash ended in an inconclusive Phase One trade deal, where China made some regulatory changes in agriculture and finance but didn’t come close to buying the vast amounts of U.S. goods it pledged to purchase. Trump wanted a Phase Two deal where China would agree to more dramatic changes. But whatever hope there was for that — and it was slight — died when the two nations locked down during the pandemic and accused each other of releasing the coronavirus.
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