By Shannielle Thompson
On Monday, April 2, the Chinese Ministry of Commerce released a list of 128 American-made products to which they will be adding tariffs of up to 25 percent. The move comes in retaliation to Donald Trump’s threats of imposing import taxes on $60 billion worth of Chinese goods including steel and aluminum, two of China’s major foreign currency earners, reports.
The Chinese’s first announcement of a counterattack warned that the ministry would move to impose taxes on imports in two stages, says the New York Times. An initial 15 percent tariff would be added to 120 products including wine and fruit, followed by another 25 percent tax hike on pork and 7 other U.S. imports.Both groups of goods ultimately account for $3 billion in U.S. exports; the latter accounting for $1.992 billion annually and of major importance to many agricultural producers who voted for Trump in the 2016 elections, reports Quartz.
The ministry has since issued an online statement expressing that its initial warning was to influence the U.S. to “rescind its measures that violate World Trade Organization rules as quickly as possible” and hopes of “both sides using dialogue and consultations to resolve their mutual concerns,” reports the New York Times.
The ministry’s swift decision to move forward with the tax hikes, while the U.S. considers public opinion for the next two months, garnered praises from Chinese state media. According to Bloomberg News, “articles and editorials posted across the Communist Party’s media stable, warned of ‘painful lessons’ to be learned in the U.S. as China’s counterattack causes suffering while financial and political gains diminish to zero.”
It seems, however, that U.S. businesses aren’t the only ones who will suffer in this brewing trade war. WH Group, a Chinese company that owns and operates Smithfield Foods – one of the world’s largest pork producers with factories in Virginia – could see a substantial loss as the Chinese ministry attacks the U.S. pork industry, reports CNN.
The company’s shares have already reportedly fallen by 11 percent since the ministry’s announcements. Experts like Valerie Law, an independent analyst out of Singapore with a close watch on WH Group’s stocks, projects the companies operating profits to plunge by 12 percent, says CNN.
In new developments in the brewing tit-for-tat trade war, The Trump administration released statements of consideration for adding another $100 billion worth of tariffs on other Chinese products, reports CNBC. However, The Chinese Ministry is committed to pushing back in major ways and is making it known that they are committed to fighting back what one representative characterized as a “battle between unilateralism and multilateralism, a fight between protectionism and free trade”, according to CNBC.
The representative continued to say, “If they release the list of $100 billion tariffs, China is prepared. And will not hesitate.”
While there is support for measures taken by both sides, experts warn of harmful economic consequences for both Chinese and U.S. business sectors and hope that both leaders will find a way to use dialogue and cooperation to settle their differences, reports CNBC.