WASHINGTON – On Monday China slapped the U.S. with $3 billion worth of tariffs on exports of steel, aluminum and more than 100 other products.
The Dow Jones Industrial Average fell more than 400 points. The S&P 500 and the NASDAQ Composite Index also dropped significantly. Markets rebounded on Tuesday.
Beijing imposed the tariffs in response to the Trump administration last month imposing a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports. The steel and aluminum tariffs were universally imposed but many analysts argue they are targeted at China. Later this month the administration is expected to impose a $50 billion tariff on China for intellectual property infringement.
The U.S. and China are the world’s largest economies, respectively. China is America’s largest creditor. Beijing owns a substantial portion of America’s more than $20 trillion debt.
The back and forth has led to concern of an impending global trade war even as the two countries are engaged in discussions at the World Trade Organization (WTO) but economists told TMN they do not think that is the case.
“One round of tariffs and the response is not a trade war,” said Barry Bosworth, who is a senior fellow at the Brookings Institution’s Economic Studies Program. “We need to wait for the second round of tariffs on a broad range of Chinese products (the specifics of which are expected to be imposed later this month) and the Chinese response.”
Bosworth said financial markets have often recovered in the aftermath of unexpected Trump administration policy change announcements.
“The U.S. president is a highly volatile person and the conflict may spin out of control, but that is only a risk, and the current situation is largely a publicity campaign,” he said. “It certainly has not reached the level of triggering a financial crisis. I think the markets are unsettled about the erratic behavior of the president in general.”
Tori Whiting, a research associate at the Heritage Foundation’s Roe Institute for Economic Policy Studies, said a tariff-facilitated financial crisis is unlikely.
“I wouldn’t say that this could for sure lead to some sort of financial crisis or any sort of crash either in the Chinese market or the U.S. market,” she said.
Whiting said the tariffs will result in higher prices for American consumers and that a scarcity of targeted products is possible.
Whiting said she does not believe “the United States is beginning a trade war with China or that we are in a trade war with China.”
This article is republished with permission from Talk Media News
Bryan is an award-winning political journalist who has extensive experience covering Congress and Maryland state government.
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