The Trump White House is on the verge of rapping China with fresh tariffs covering $200 billion in imports with trade talks between the two countries at a virtual standstill.
The U.S. has already applied tariffs to $50 billion worth of Chinese goods and China has retaliated with tariffs of its own. Another escalation in trade tensions could derail plans for upcoming talks and potentially damage the world’s two largest economies if the dispute drags on.
Trump promised during his presidential campaign and after he entered the White House that he would seek to reduce massive U.S. trade deficits with China.
The ongoing trade fight has spurred a number of U.S. companies to join together to urge the White House to tamp down tensions. It’s also making investors nervous. The Dow Jones Industrial Average DJIA, -0.38% and S&P 500 DJIA, -0.38% SPX, -0.57% both fell in Monday trades.
The U.S. has run large deficits with China for years and in some cases no longer produces certain goods such as consumer electronics that are popular with Americans. It won’t be easy, and it might even be impossible, to reduce the gap much any time soon.
In 2017, the U.S. posted a $376 billion deficit in goods with China. Most glaring is the huge deficit in computers and electronics, but the U.S. is a net importer from China in most market segments except for agriculture.
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×So far U.S. has excluded Chinese-made cellphones from its tariffs — goods that Americans buy in huge numbers each year.
China has been a big buyer of American-grown soybeans and other crops. Planes made by BA, -1.15% also are a product in demand in China.
What happens next? It’s hard to tell. Hardly anyone expected President Trump to go as far as he has in what’s become a high-stakes poker game. But a trade dispute between the two largest economies in the world could result in lasting damage to the global economy if it metastasizes.