The Unites States has decided to impose 25% tariff on $50 billion of Chinese exports. This statement was made by the President Donald Trump on Friday. Beijing too has decided to respond to this trade war. The world’s two powerful economies have declared a trade war feared by the industry.
It’s said that tariffs levied will be a punishment for the alleged theft of American intellectual property. Trump has also warned china of additional taxes if the Chinese government takes revenge by levying taxes on American goods and services.
Initially the tariffs will not apply to the entire $50 billion of the exports as it was decided in the early March this year. These tariffs are basically to prevent the transfer of American intellectual property to China and thereby protecting American jobs.
China has also responded by imposing taxes on American goods and services. The commerce minister announced that it is very unfair and called for support from other nations to stop this outdated behavior from the United States.
Last month Trump had announced the imposing of tax on import of steel and aluminum from Canada Mexico and other European countries. This has outraged many leaders in the European Union.
Some of the U.S officials believe that China has emerged as a dominant player in the field of emerging technologies by theft of American intellectual property. Some of the commodities are exempted from these tariffs. This list will not include the popular television and cell phone models from China.
The U.S. trade representatives said that they will start collecting the duties on approximately 818 Chinese goods worth $34 billion as of July 6. Tariff on another set of 280 products are said to take effect sometime later.
There were trade negotiations in mid-May this year. It was decided that China would increase its purchase of agriculture and energy products to reduce the trade imbalance to some extent. The trade war was on hold for some time. But ten days later, United States said that it would continue with imposing tariffs on Chinese products. There were trade talks held in Beijing, which were not much effective. The Chinese government now has warned the U.S. that it would not go ahead with the increase in purchase of U.S. goods if the tariffs are imposed.
The U.S. administration had talks with the Chinese telecommunication firm ZTE to remove the ban on them for purchasing of American parts. But the lawmakers in the Congress have resisted this move to remove the ban on ZTE as they consider it as a security threat.
Some of the tariff sensitive shares have fallen but the stock market overall has a modest downward trend.