China warned The US on Friday that it would respond should President Trump follow through on the threats he made last week. Donald trump had stated that he had ordered US trade officials to apply new import tariffs on a further $100 billion of imports into the US from China.
China’s response was a warning of a “fierce counter strike” of trade measures on the US should Trump’s threats turn into action. Such measures and countermeasures would lead to an outright trade war between the US and China which would likely hurt the US more than China.
Will Increasing Import Tariffs Lead to a US-China Trade War?
A US-China trade war could lead to a slowdown in economic growth in the US. This might reduce an increasing demand for oil that has been supporting oil prices recently particularly the price of American shale oil.
Donald Trump’s reaction is an obvious attempt to reassert the influence of the US. An influence not only on oil prices and supply but also on global trade in general! It is yet another step in his desire for the US to have more control over its imports and exports. He has demanded that changes be made to the NAFTA agreement (North American Free Trade Agreement) and he has withdrawn the US from the TPPA(Trans-Pacific Partnership Agreement).
OPEC Oil Prices Likely to be Maintained
He, or his administration, has also applied tariffs to US imports of aluminum and steel. As an aside, it should be noted that each of his policies was announced first on social media, particularly via Twitter tweets. It seems like OPEC oil prices are likely to rise or at least maintain their current level. Time will tell if President Trump’s future policies will have much effect, given the power of OPEC and Russia. Keep your eyes on Twitter!
Escalating Import Tariffs and a Trade War Will Help Nobody
That aside, a trade war with China will not help the US economy. Knee-jerk reactions should not be part of US politics, particularly internationally. Many will support American action aimed at curbing China’s growing influence in world business. However, cool heads are needed to prevent a tit-for-tat merry-go-round that would benefit neither major power. Tit-for-tat Import tariffs do not help.