China, the US still able to avoid all-out trade war

World
Europe

The world’s two largest economies may still be able to avoid an all-out trade war, despite the planned imposition of tariffs on billions of US dollars' worth of goods.

“Things can take a turn for the better. I think it’s still possible that China and the United States can reach something more constructive," said John Gong, a professor of the University of International Business and Economics in Beijing.

On Friday, the US announced additional tariffs of 25 percent on Chinese imports worth approximately 50 billion US dollars.

China responded rapidly with an announcement that it will impose an additional duty of 25 percent on 659 different US products, also worth about 50 billion US dollars.

Gong said President Donald Trump is an unpredictable leader, and because of this, the deterioration of trade relations between the US and China can still be prevented.

Washington plans to impose tariffs on goods that are part of Beijing’s Made in China 2025 plan, which covers the nation’s high-tech industries. Meanwhile, China has two separate lists of US goods that will be subject to tariffs.

The first includes nearly 550 agricultural and automotive products, among others, valued at roughly 34 billion US dollars. China will start collecting higher taxes on these products starting July 6.

China will also make a separate announcement at a later date, specifying tariffs on other product lines, including chemicals, medical equipment, and energy products.

01:25

Gong said the impact of these tariffs can still be controlled, and products sold to the US only account for less than 20 percent of China’s exports.

However, due to the fact that most Asian countries depend on trade, the economic situation in the region might deteriorate if trade relations deteriorate.

China is not the only target of the Trump administration’s “America First” agenda. Other countries are also fighting back.

Canada said it would impose retaliatory measures on July 1 to Trump’s metal tariffs, and the European Union (EU) is considering a reciprocal 25 percent duty on US imports, as well as measures for iconic US products such as Harley Davidson motorcycles, bourbon, and blue jeans.

Mexico imposed tariffs on US products valued at 3 billion US dollars, covering pork, apples, potatoes, bourbon and cheese.

South Korea also said it has notified the WTO that it would suspend tariff concessions on US goods' worth close to half a billion US dollars.

Gong said 2018 could have been a prosperous year, as the global economy continues its recovery. But the US' move raises the risk of a global downturn fueled by protectionism.