A few days ago, the United States took its first step in what many are calling a trade war with China. President Trump signed a memorandum outlining measures to impose tariffs on Chinese goods, restrict Chinese investments, and use the World Trade Organization (WTO) dispute settlement process for related issues. While the White House and the Office of the U.S. Trade Representative did not specify the exact value or level of tariffs, sources within the administration reportedly indicated that the U.S. would target approximately $60 billion worth of Chinese imports. These measures stem from the results of the 301 investigation launched last year, which accused China of violating intellectual property rights and forcing technology transfers.
The question now is: which Chinese products will be hit by these tariffs? According to Goldman Sachs, power tools and electrical products are likely to be at the top of the list. This is due to the significant trade deficit the U.S. has with China in these categories, as well as the high consumer demand for such goods. The report also suggests that consumer electronics, including sports equipment, toys, jewelry, and televisions, could face similar scrutiny. On the Other hand, items like aircraft, navigation equipment, railway machinery, ships, and furniture are less likely to be targeted, as they represent a smaller share of U.S. domestic consumption.
Goldman Sachs evaluated potential targets by first excluding U.S. exports where there was a trade surplus with China. It then ranked the remaining products based on five key factors: the bilateral trade balance, the tariff gap between the U.S. and China, the proportion of final consumption versus intermediate use, the share of Chinese imports in total U.S. demand, and whether the product falls under China’s "Made in China 2025" initiative.
China responded swiftly, announcing its own countermeasures. On March 23, 2018, the Ministry of Commerce released a draft list of U.S. imports that could be subject to additional tariffs, including steel and aluminum products. The list included 128 taxable items across seven categories, valued at around $3 billion in 2017. The first part of the list involved $9.77 billion in U.S. exports, with a proposed 15% tariff on items such as fruits, nuts, wine, and steel tubes. The second part, involving $1.992 billion in exports, included pork and recycled aluminum, with a 25% tariff proposed. As the U.S. prepares its own list of Chinese imports to target, China is expected to follow suit, maintaining a similar scale and intensity.
Trade protectionism poses a serious threat to global economic growth. While China has always sought peaceful dialogue, the Trump administration's aggressive stance has sparked growing public sentiment against the U.S. Many Chinese citizens now believe that a strong response is necessary. A popular saying in China goes, “No tears in the coffin,†implying that if the U.S. insists on a trade war, the Chinese people will stand united. Online campaigns advocating for boycotting American goods may gain traction, turning this into more than just a government-level conflict—it could become a “people’s war.â€
Since taking office, President Trump has made reducing the U.S. trade deficit a priority. However, it remains unclear where his confidence in confronting China comes from. Economist Adam Posen called the move “stupid†and criticized it as incompetent or misleading. Others argue that the U.S. trade deficit is driven by broader macroeconomic factors, such as budget and savings shortfalls, and that tariffs are not a viable solution.
Fuyao Glass CEO Cao Dewang expressed support for higher tariffs, stating that he would not sell products to the U.S. if it wasn’t profitable. He emphasized that while tax increases may hurt short-term trade, they are not the answer to long-term economic challenges.
History shows that high tariffs can lead to devastating consequences. The Smoot-Hawley Tariff Act of 1930 triggered a global trade war and worsened the Great Depression. Today’s sharp increase in tariffs threatens an already fragile global recovery, making the future of the world economy more uncertain and potentially slowing down the globalization process.
Brookings scholar Warwick J. McKibbin warned that even a 10% tariff hike could trigger a small-scale trade war, reducing global GDP by 1% to 4.5%. If tariffs reach 40%, the world could face another major economic downturn. As tensions escalate, the stakes for both nations—and the world—have never been higher.
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