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Sunday, May 19, 2024
HomeNewsEconomyU.S. Hikes Tariffs on China to 25 Percent as Trade Deficit Narrows, Negotiations Continue

U.S. Hikes Tariffs on China to 25 Percent as Trade Deficit Narrows, Negotiations Continue

Graphic concept for U.S.-China trade war, tariffs on imports and exports. (Photo: AdobeStock)

Trump: “There Is Absolutely No Need to Rush”

Graphic concept for U.S.-China trade war, tariffs on imports and exports. (Photo: AdobeStock)
Graphic concept for U.S.-China trade war, tariffs on imports and exports. (Photo: AdobeStock)

On Friday, the U.S. hiked tariffs on China from 10 percent to 25 percent, a sharp increase worth more than $200 billion amid ongoing trade negotiations. At 9:00 AM EST, the world’s largest and second largest economies will resume talks.

“Talks with China continue in a very congenial manner – there is absolutely no need to rush – as Tariffs are NOW being paid to the United States by China of 25% on 250 Billion Dollars worth of goods & products,” President Trump tweeted early Friday morning. “These massive payments go directly to the Treasury of the U.S.”

The Chinese vowed to retaliate.

“China deeply regrets that it will have to take necessary countermeasures,” China’s Ministry of Commerce said in a statement.

While Wall Street and D.C. have largely opposed President Donald Trump’s tariff strategy, it is clearly working to reduce the trade gap between the two nations.

On Thursday, the U.S. trade deficit rose only $0.7 billion to just $50.0 billion in March, less than expected and beating the consensus forecast. The historically narrow gap comes after two sharp consecutive declines in the trade deficit.

Year‐over‐year, the average goods and services deficit fell $1.9 billion, as average exports increased $4.7 billion and average imports increased by just $2.7 billion.

The politically-sensitive U.S. trade deficit with China fell $1.9 billion to $28.3 billion in March. Exports rose $1.4 billion to $10.5 billion and imports fell $0.5 billion to $38.8 billion.

In Shanghai, the SSE Composite Index (^SSE) closed +88.26, or 3.10% to 2,939.21. On Thursday, the Dow Jones Industrial Average (^DJI) closed −138.97, or 0.54% at 25,828.36.

But the U.S. economy has proven far more resilient than the Chinese economy throughout trade negotiations. In 2018, the U.S. economy grew 3.0% (Q-Q), an annual rate of growth that was elusive under the previous administration.

“Tariffs will make our Country MUCH STRONGER, not weaker. Just sit back and watch!” President Trump added in a tweet. “In the meantime, China should not renegotiate deals with the U.S. at the last minute. This is not the Obama Administration, or the Administration of Sleepy Joe, who let China get away with “murder!”

The Bureau of Economic Analysis (BEA) “advance” estimate for first quarter (Q1) 2019 gross domestic product (GDP) came in at a 3.2% seasonally-adjusted annual rate (SAAR). Real GDP rose 2.2% in Q4 2018 and by 2.2% in Q1 2018.

“The last trade deficit report coming in below -$50B was a bigger deal than expected,” Tim Anderson at TJM Investments said. He noted the narrowing of the trade gap added more than 1% alone to Q1 2019 GDP.

Meanwhile, the Chinese economy, which was already expected to slow in 2019, was feeling the pain from 15% tariffs. In January, before the tariff increase was postponed, an analysis firm specializing in the Chinese economy said a hike would be “excruciating.”

“If tariffs escalate further after 1 March, the added pressure on the Chinese economy will prove excruciating,” Shehzad Qazi, managing director of China Beige Book International told The Guardian.

Written by

PPD Business, the economy-reporting arm of People's Pundit Daily, is "making sense of current events." We are a no-holds barred, news reporting pundit of, by, and for the people.

Latest comments

  • The Chinese need us more than we need them. Simple math. They will cave.

    • I’m not sure they will cave, but it seems America has the leverage here.
      The problem is the globalist free traders profit enormously by closing American plants with higher wages and health care, and moving manufacturing overseas where then can pay cheaper wages, no health care and environmental concerns don’t matter.
      Import products into the American market with cheaper prices undercutting American goods.
      The biggest obstacle is the globalist free traders, should I say profiteers, in the Republican and Democratic parties. There’s some overlapp with the never-Trumpers, but that includes about everyone.
      Letting China take over the American manufacturing base and closing Amerian manufacturing plants has enabled China to become a world manufacturing, military and economic power.

  • Here are a few VALID FACTS I found out, while LIVING in China.

    1. 48 percent of the ENTIRE Chinese population is on some type of welfare.

    2. China quit buying our pork at first, so show us who was boss. They bought russian hogs (no no no, NOT their women) and brought in a very bad and deadly pork illness. This has already spread to nearly 50 percent of the provinces. So what did they do? They BOUGHT US PORK because it is clean. The main meat in china is PORK!, then Chicken, Beef, Lamb, in that order. Meanwhile the russian illness is spreading and they cannot stop it at the pig farms.

    3. If the chinese government cannot feed their populace, THAT is what caused the revolution in China in the first place.

    4. This year in China is a historic year. They do NOT wish to be seen as kowtowing to America, that is the reason they attempted to renunciation of the agreement, to SHOW the CHINESE PEOPLE they were in Charge .

    • Fascinating, and thank you for writing it. For thousands of years, China has taught and thought that they are the ruling country in this world. Their corrupt nature has kept their best days at bay, and I guess will continue until some future day, maybe decades from now. They’re big and they’ll be a threat to us in time. Meanwhile, many of their very best minds have migrated to America but retain their loyalty to China. That is a threat.to our research facilities thoughout our country.
      What we can do best is never buy anything China. It’s important.

  • Anyone know how many $1,000 Apple iPhones were made in China today?

    • Who gives a sh!t.

  • 2019 is the Chinese Year of the Pig… How ironic that the swine flu is decimating Chinese hog farms across the country!

  • Money will make a person do crazy things. Even go to war.

  • Just heard a liberal pundit claiming that families who go to Walmart to buy their kids underwear will now have to pay more. Oh, BooHoo, if you can’t afford American-made undies Go Gonzo!

  • #BoycottChina

    Remember the crushed bodies of the dissenters/protesters from Tianenman Square every time you see something at Walmart/Kohl’s/Target/et al “Made in China”. PUT IT BACK on the shelf, you DO NOT need it.

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