US-China trade war heats up: 104% tariff imposed

US-China trade war has just gotten a new twist with the White House adding a 104% tariff on April 9 Chinese imports. This is a follow-up of US President Donald Trump who threatened to add a further 50% tariff on China if it increased its 34% tariff on US exports. Trump's message warned China that any response from them would result in new and higher tariffs to be triggered on day one. The US responded to scheduled negotiations with China by sidelining them and initiating instead negotiations with countries that have endured long trade talks. This has raised concerns regarding the possible effects on international trade and already strained relations between the two countries.

Impact on global trade and economies

It is considered by the experts that the intensifying trade war may have long-term effects, which are:

•  Greater Burden on Consumers: Tariffs may raise the cost of American consumers, with an estimated hike of over $1,200 per year per household.
• Loss of US Competitiveness: US tariffs may undermine the US manufacturing sector's competitiveness, and provide a boost to the Europeans and Asians competitors.
•  Upset to Global Trade: The trade war may pull the plug on supply chains and impact industries worldwide, even the automobile industry.

Pros for other countries

But US-China trade tensions also present opportunities for other nations, including India. With the existing 10% tariff on Chinese exports, Indian exporters can potentially poach market share in America. Indeed, a study by Oxford Economics revealed that India was the fourth-largest beneficiary of trade diversion between 2017 and 2023, after Trump's tariff actions.

What's next?

As the trade war heats up, the world is holding its breath to see China's move. Beijing would retaliate sooner or later, perhaps with aggressive moves that would keep the trade war going. The world is holding its breath for China's reaction, which would leave a lasting impact on global trade and economies.