Trump has long made the trade war with China a focus of his presidency. Conflicts and threats of tariffs against the world’s largest exporter have waged on for more than a year, leading to numerous economic scares and uncertainties.
The latest threat of tariffs
In the latest round of escalations, Trump announced a 10 percent tariff on a broad spectrum of Chinese imports – including electronics, clothing and household goods worth roughly $300 billion – that would go into effect September. The tariffs would have a massive impact on consumer spending. Anticipating the economic fallout, the Fed lowered interest rates, stock markets slumped and analysts forecasted a recession.
Now, the administration has backed off the 10 percent tariffs, delaying their imposition on most Chinese imports until later this year. The new target date of December 15th will reduce the impact on holiday spending. In response, the market is trending back upward – for now.
The economic fallout
Still, major damage has already been done. China’s leader, the aggressive nationalist Xi Jinping, has taken a hardline stance, allowing Chinese currency to weaken rather than bend to U.S. influence. China is now refusing to purchase U.S. crops – a huge hit to American farmers.
The real winners and losers
All told, Jinping has less to lose by standing his ground. The powerful Chinese leader has an incentive to drag his heels on trade negotiations in hopes of a Democratic winning the White House in 2020. Jinping isn’t subject to term limits, which means his power is sure to weather the storms of a weakened Chinese economy.
The real winners and losers, however, aren’t the stubborn leaders of economic superpowers. Instead, it’s everyday Americans – those who would be hit hardest by another recession.