Why Trump imposed 104% Tariff hike on China

DDM NEWS

Donald Trump

The US has imposed a 104% tariff on Chinese goods due to a trade war escalated by President Donald Trump’s administration.

Here’s a breakdown
– Initial Tariffs : The Trump administration initially imposed 20% tariffs on Chinese goods, which China responded to with targeted tariffs on US products, including agricultural goods and energy imports.

– Escalation: Trump threatened an additional 50% tariff on Chinese goods, which would bring the total tariff to 104% if implemented.

Reasons Behind the Tariffs: The tariffs aim to curbing Illicit Synthetic Opioids.

The Trump administration determined China wasn’t doing enough to stop the trade in illicit synthetic opioids.

Protecting US Industries: The tariffs are meant to protect US industries, such as agriculture, aerospace, electronics, and auto, from what the US sees as unfair Chinese trade practices.

China’s Response: China has retaliated with its own tariffs and non-tariff measures, including 34% Tariff on US Goods.

China imposed a 34% tariff on US imports, mirroring the US tariff on Chinese goods.

Export Controls and Sanctions: China has imposed export controls on rare earth minerals and sanctioned US companies for alleged military technology cooperation with Taiwan.

The ongoing trade tensions between the US and China have led to a significant increase in tariffs, affecting various industries and economies.

The President of China is Xi Jinping. He has been leading the country since 2013 and has been a key figure in shaping China’s domestic and foreign policies.

Regarding the US tariff imposition, China retaliated under Xi Jinping’s leadership.

The Trump administration imposed additional 10% tariffs on Chinese goods, prompting China to respond with its own set of measures.

China’s retaliatory actions include:
Tariffs on US Agricultural Products 10-15% tariffs on US agricultural goods such as chicken, wheat, corn, cotton, sorghum, soybeans, pork, beef, seafood, fruits, vegetables, and dairy products.

Suspension of Export Permits: China suspended export permits for certain US soybean producers, citing non-compliance with quarantine regulations.

Ban on US Log Imports: China halted imports of US logs due to pest concerns.

Sanctions on US Companies: China added US companies to its unreliable Entities’ List and imposed export controls, citing national security and interest concerns.

Anti-Circumvention Investigation: China initiated an anti-circumvention investigation into US optical fiber exports.

These measures demonstrate China’s efforts to protect its economic interests and respond to the US trade policies under Xi Jinping’s leadership.

Comparing the economies of the US and China reveals two distinct strengths and challenges.

Economic Size and Growth
The US currently holds the title of the world’s largest economy, with a nominal GDP of $29,167 billion, slightly surpassing China’s $18.273 billion.

However, China’s economy is growing faster, with a 5.2% growth rate in 2023, more than twice that of the US.

Over four years, China’s economy grew by 20.1%, while the US grew by 8.1% .

Per Capita Income and Productivity
The US has a significantly higher per capita GDP of $86,600, reflecting its high-wage labor market and strong service-driven economy.

China’s per capita GDP stands at $13,445, highlighting its lower individual income level despite its vast economic size.

Key Economic Indicators
GDP Growth Rate: China (5.2%) vs. US (2.5%) (2023)

GDP (Nominal): US ($20.5T) vs. China ($13.6T)

GDP per Capita: US ($63k) vs. China ($18k) (PPP adjusted)

Unemployment Rate: US (4%) vs. China (5%) (urban unemployment rate)

Future Projections
– If China hits its growth target for 2035 and the US continues to grow at 2.3%, China’s economy will grow by 100%, while the US will grow by 41% from 2020 to 2035.

By 2035, China’s economy is projected to be 60% bigger than that of the US, making it the world’s largest economy.

The US and China have a complex and deeply intertwined economic relationship, with trade volumes reaching $4.44 trillion in 2024, a 4.2% increase from the previous year.

This relationship is built on mutual interests, with the US relying on China as its third-largest goods export market and sixth-largest services export market.

Key Aspects of US-China Economic Ties:

Trade and Investment: The US and China have a significant trade relationship, with US exports to China supporting over 930,000 jobs in the US.

Chinese firms have invested over $144 billion in the US, creating 230,000 jobs.

Business Operations: Over 70,000 American companies have established businesses in China, including tech giants like Apple, which relies on China for production from 80 of its 200 key suppliers.

Economic Interdependence: The two economies are highly interdependent, with the US and China being each other’s largest trading partners.

This interdependence has led to increased cooperation in areas like climate finance and financial markets ¹

*Challenges and Opportunities:*

Tariffs and Trade Tensions: The US has imposed tariffs on $250 billion worth of Chinese imports, while China has retaliated with tariffs on US exports.

However, both countries have expressed a desire to resolve trade disputes and improve economic cooperation.

Technological Competition: The US and China are engaged in a technological rivalry, with the US government escalating pressure on China, especially in the high-tech sector.

Climate Finance and Cooperation: The two countries are exploring opportunities for cooperation in climate finance, which could help address global economic uncertainties .

Overall, the US-China economic relationship is complex and multifaceted, with both countries seeking to balance their economic interests with strategic competition.

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