Donald Trump’s 25 per cent tariff on Chinese goods comes into play today, and China’s fighting back – slowly, but surely. Could it be ‘trade war’?
What it means: A few weeks ago, Trump threatened to put a tax on Chinese steel and aluminium that would push up its price for American consumers, hopefully incentivising them to buy American steel instead and p*ssing off the Chinese in the process. China didn’t seem to mind that much, saying they could just sell steel somewhere else.
Now, it’s doing that thing where it sloooowly, caaaalmly, starts moving its chess pieces to a point where it’s making it clear that it’s got power to retaliate, but wishes it didn’t have to, so maybe don’t push its buttons anymore, ‘mkay?
China makes $375bn more than America from their trade deals right now (what's known as a 'trade deficit'). This is Trump’s way of getting his money back. China has said it may add its own tariffs to American goods imported into China, specifically targeting the ones that come from states where Trump supporters live – that’s farm states producing things like wine, apples, and ethanol.
The finance world seems pretty worried about the prospect of a ‘trade war’, where countries use economic ‘weapons’ like extra taxes and even sanctions (where you refuse to buy anything from that country at all) to punish their opponents for their politics. It’s not reached that point yet, but if they don’t sort it out, it’ll be Chinese and American consumers paying the price.
