Following President Trump’s latest round of proposed trade tariffs, China announced its own retaliatory trade tariffs Wednesday on over 100 American goods. The Chinese tariffs will impact $50 billion in U.S. exports, mirroring the American tariffs in economic impact.
Trump’s second round of tariffs issued against China targeted multiple technological exports, such as transistors and semiconductors, and large-scale mechanical implements, such as motorcycles and airplane parts. China’s response will slap a 25 percent tariff on products ranging from cars to orange juice. The president’s plan still needs approval, but Chinese response to any further attempt to impact the country economically was expected to be swift.
The move represents the first back-and-forth maneuvers between the two global superpowers, signaling the trade war economists feared would happen when Trump surprised many with his steel and aluminum tariffs last month. At that point, the president seemed to welcome a trade war, exclaiming how easy they were to win. Wednesday morning, the president delusionally tweeted, “We are not in a trade war with China.”
Despite this denial of a reality that he created, American and European markets saw steep drops following China’s announcement. The Dow Jones index slipped by 480 points by the beginning of trading Wednesday morning, and the European Stoxx 600 Index closed at .5 percent loss.
Trump’s chief economic advisor Larry Kudlow tried to calm the financial storm on Wednesday following the stark dip:
President Trump is going to deal with it. There’s no trade war here. What you’ve got is the early stages of a process which will include tariffs, comments on the tariffs, then ultimate decisions and negotiations. There’s already backchannel talks going on. So look, I understand the stock market’s anxiety. I get that. But on the other hand, don’t over react.
The Dow remains 150 points down. Despite the president and Ludlow’s claims, this has all the trappings of a trade war.
Find our latest thoughts on the economic impact of Trump’s reactionary moves right here.