America has started the biggest trade war in history: China

China’s Commerce Ministry on Friday said the country had no choice but to retaliate after the US started “the biggest trade war in economic history”. America’s 25% tariff on $34 billion of Chinese imports takes effect today, in the first stage of a proposed tariff on imports worth nearly $450 billion. China has not provided details of its retaliation plan.

The White House is confident, it can win a straight competition with China. President Trump decided to fight back in the Trade War he says which started decades ago by the Chinese. His strategy to punish China which the US accuses of stealing technology and trade secrets and for unfairly treating US trade companies who wanted to do business there.

biggest trade war

Now the US targetting technology that China has about to dominate Xi Jinping made in China 2025 initiative. China 2025 is an ambitious national goal to lead and control industries like robotics, electric cars, and computer chips. The US cause those industrially significant technologies and slapping a 25% tariff and 1100 product categories like aerospace, robotics, high-end manufacturing, and autos.

US companies who pay the tariffs to the US government when they import the goods. Companies can either absorb the higher cost or pass it to the consumer.

biggest trade war

Now part two of the President’s strategy expert controls or investment restriction a plan is in work to limit what American technology Chinese citizens and companies can buy and the White House believes it has the edge. China has more to lose than the US since China’s economy relies so much on exports to the US $505 in the last year. The Presidents’ advisors are confident that the US economy is so strong right now that it can absorb the hit of the tariff dispute.

Oxford’s economists predict the China tariff will only able to shave about a two-tenths percentage of the economic growth next year. Of course, that always does not sound a protective trade war that something economists say is impossible to predict.

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