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US Considering Trade Moves on China

The United States may not be done with threatening financial tariffs against China, continuing the back and forth the rhetoric that is leading to much uncertainty in the greater market.

 

As part of the economic threats made by the United States towards China are indications that tariffs can be imposed on up to $150 billion of goods imported from China. The introduction of tariffs may lead to an increase in manufacturing jobs in the United States, a point often repeated by President Donald Trump on the campaign trail, but may be a double-edged sword in that it will potentially lead to higher prices for consumers.

 

In addition to the trade imbalance between the United States and China are concerns regarding abuses of intellectual property by many Chinese businesses. These intellectual property abuses are not persecuted by Chinese authorities who take a more hands-off approach.

 

China has also been accused of propping up the businesses through state support in a number of industries and making it difficult for other global companies to compete. An example of this is in the steel industry where many Chinese state-sponsored companies will flood the market with cheap steel, making it difficult for global steel producers to survive, particularly in countries with social welfare programs that add significantly to the cost of operation.

 

This state support is part of China’s 2025 platform, in which the Chinese government is seeking dominance of certain key industries, a process that has infuriated many in the U.S. The United States is proposing a 25% tariff on certain Chinese exports to the U.S.

 

China has responded to the latest threat today by indicating that they are ready for a trade war if the United States is pursuing one. China indicated that it will protect their own interests of the United States continues an arbitrary and relentless verbal attack on their economy.

 

The increased rhetoric comes just days before a scheduled meeting by the Commerce Secretary of the United States, Wilbur Ross.

 

Although markets have taken notice of some of the earlier interactions between China and the United States in regards to these trade action, the current reaction has been muted and unobservable. If a trade war were to hit between the two countries, it might spell a large negative factor on economic trade and the stock market.