A few days ago, the United States launched its first salvo in a trade war with China. President Trump signed a memorandum outlining measures to impose tariffs on Chinese goods, restrict Chinese investments, and use the WTO dispute settlement mechanism for related issues. While the White House and the Office of the U.S. Trade Representative did not specify the exact value or rate of the tariffs, sources within the administration reportedly indicated that the U.S. would target $60 billion worth of Chinese imports. This move is part of a broader strategy based on the results of last year’s Section 301 investigation, which accused China of intellectual property violations and forced technology transfers.
So, which Chinese products are most likely to face these new tariffs? According to Goldman Sachs, power tools and electrical equipment top the list. This is due to the large U.S. trade deficit in these categories, as well as the relatively high consumer demand for such goods. The bank also noted that consumer electronics, including sports goods, toys, jewelry, and televisions, are among the high-risk items. On the Other hand, sectors like aviation equipment, railway machinery, ships, and furniture have a smaller share in U.S. domestic consumption and thus are less likely to be targeted.
Goldman Sachs evaluated the potential targets by considering five key factors: the bilateral trade balance, tariff gaps between the U.S. and China, the end-use of imported goods (rather than intermediate inputs), the proportion of U.S. imports from China in total domestic demand, and whether the product is highlighted in China’s “Made in China 2025†initiative.
China has already started to push back. On March 23, 2018, the Ministry of Commerce released a list of U.S. imports subject to suspended concessions, targeting steel and aluminum products. The list included 128 taxable items across seven categories, valued at around $3 billion in U.S. exports to China. A second group of eight items, including pork and recycled aluminum, was also proposed with higher tariff rates. Analysts expect China to respond further once the U.S. finalizes its own list of Chinese imports under consideration.
The ongoing trade tensions pose a serious threat to global economic growth. As the article in the Global Times pointed out, while China does not seek a trade war, many citizens believe the U.S. needs to learn a lesson. With growing nationalist sentiment, public support for actions like boycotting American goods could surge. This could turn the trade conflict into more than just a government-level battle — it might become a "people's war."
Since taking office, Trump has prioritized reducing the U.S. trade deficit. However, his confidence in confronting China remains puzzling. Economists like Dr. Adam Posen have criticized the approach as short-sighted and counterproductive. Cao Dewang, chairman of Fuyao Glass, even suggested he would welcome higher tariffs if they made business unprofitable. He emphasized that the U.S. market will always exist, but profits must come first.
History shows that protectionism rarely leads to positive outcomes. The Smoot-Hawley Tariff Act of the 1930s led to a global trade war and prolonged the Great Depression. Today, similar policies risk slowing down an already fragile global recovery. Experts warn that even a modest increase in tariffs could trigger a small-scale trade war, hurting economies worldwide. If the situation escalates, the consequences could be far worse.
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